Germany seeks views on NS2, may plan end to pipeline

LONDON (ICIS)–Germany’s ministry of economy has been polling European countries on their views regarding the certification of Russia’s Nord Stream 2 operations by its company Nord Stream 2 AG, ICIS understands. This comes even though the Gazprom subsidiary had been rejected and replaced by a new entity earlier this year.

ICIS understands this to mean the German government may be looking to terminate the pipeline once and for all, with the assessment procedure a necessary legal step towards that.

This view is backed by one source who has been close to discussions throughout, as well as an EU-based lawyer with knowledge of the matter.

The moves preceded the news of “unprecedented” damage to both the Nord Stream 1 and Nord Stream 2 pipelines late on Monday which drove further price spikes across European gas hubs on Tuesday (see separate story).

LEGAL STEP

In a letter issued 19 September and seen by ICIS, the energy regulator of an EU country said the German federal ministry of economic affairs and climate action was looking to address the issue of granting certification to operator Nord Stream 2 AG, which is headquartered in Switzerland, a non-EU country.

“The new assessment will address whether granting the certification to an applicant controlled by an undertaking from a third country, [such as a subsidiary of Gazprom] will impact the security of energy supply of the member state and the Union,” it said.

Stakeholders who had been polled were due to submit their views by 21 September.

It is unclear why the German government had triggered the certification assessment process for Nord Stream 2 AG, considering that earlier this year Gazprom set up a new company – Gas for Europe GmbH – to operate the German section of the pipeline.

The certification procedure officially started in September 2021, but in mid-November the German energy regulator BNetzA suspended the procedure saying it could only certify a Germany-based entity.

Germany suspended the two subsea pipelines which make up Nord Stream 2 and were supposed to supply 55 billion cubic meters of Russian gas annually. The decision was taken following Moscow’s recognition of the self-proclaimed Luhansk and Donetsk republics in eastern Ukraine on 22 February 2022.

INSOLVENCY EXTENSION

Swiss-based operating company Nord Stream 2 AG was due to file for insolvency following the project’s suspension in February but received a moratorium until the beginning of September from a Swiss court.

Earlier this month, it was granted a second extension until 10 January 2023 to repay debt and avoid bankruptcy, according to the Swiss Official Gazette of Commerce (SOGC) of 8 September 2022.

An EU-based lawyer commented on Germany’s motivations, particularly given current circumstances where Russia continues to wage war against Ukraine.

Germany will know “that central and eastern European countries would oppose” any flow of gas through the pipeline in future, he said, noting he was doubtful German economy minister Robert Habeck would clear the certification.

The German economy ministry did not reply to requests for comment by publication time.

Nord Stream 2, as well as the older pipeline Nord Stream 1, returned to the headlines on Monday evening following news there had been a sudden drop in pressure along the entire subsea corridor.

The pipelines had been partially filled earlier in the year and there were reports that some of the residual gas had leaked in Danish waters.