Politics Regional

Germany says Nord Stream 2 gas pipeline certification cannot now go ahead

German Chancellor Olaf Scholz said Feb. 22 that the Nord Stream 2 gas pipeline from Russia could not now be certified after Russian President Vladimir Putin late Feb. 21 publicly recognized eastern Ukraine’s Donetsk and Luhansk regions as breakaway states.

Scholz was cited in media reports as telling reporters in Berlin that the situation had now changed “in light of events” and there could be no certification of the pipeline without which it could not start operating,

Speaking at a press conference in Dusseldorf, German Energy Minister Robert Habeck confirmed the move, saying Putin had violated international law.

“Our support for Ukraine cannot be in question,” Habeck said. “Therefore we have withdrawn our request to the [German regulator] on a review of security of supply requirements for Nord Stream 2,” he said.

“This report is a pre-condition for certification of Nord Stream 2.”

The move effectively means the certification process cannot continue, thereby preventing the 55 Bcm/year pipeline — which was completed in September — from beginning commercial operations.

Habeck also said the move by Putin would result in sanctions to be coordinated between the EU and the US.

The process for certifying the operator of Nord Stream 2 was suspended in mid-November after the regulator asked the Switzerland-based company to set up a German subsidiary and transfer assets to the new unit in order to comply with German law.

Nord Stream 2 said on Jan. 26 it had founded the new German subsidiary — Gas for Europe GmbH — which was to become the owner and operator of the 54-km section of the pipeline located in German territorial waters.

Under the amended EU Gas Directive, which came into force in May 2019, new non-EU gas pipelines must comply with regulatory requirements on ownership unbundling, third-party access, and tariff transparency.

The protracted certification process for Nord Stream 2 has been a significant contributor to the recent gas price strength in Europe.

The TTF day-ahead price hit an all-time high of Eur182.78/MWh on Dec. 21, an increase of 985% year on year, according to S&P Global Platts assessments.

The TTF day-ahead was assessed on Feb. 21 at Eur71.60/MWh, but prices surged again on Feb. 22 after Putin’s recognition of the Donetsk and Luhansk regions as breakaway states and Scholz’s comments on Nord Stream 2.

Source: S&P Global

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