Germany denies Nord Stream 2 pipeline EU rules waiver

Germany's energy regulator on Friday declined to grant a waiver of EU gas directives to the operators of the Nord Stream 2 pipeline, news wires reported. With the move it dealt a fresh blow to the project to carry gas from Russia to Germany under the Baltic Sea.

According to Germany's Bundesnetzagentur regulator, the project is not exempt from so-called unbundling rules, which imply production, transport and distribution of energy must be independently organised, on the section that runs through German territory. It said the Nord Stream 2 consortium, which also includes Uniper, Wintershall-Dea, Shel, OMV and Engie, did not qualify for an exemption because the pipeline had not technically been completed by 23 May 2019.

The consortium, whose five Western partners put up 50% of the finance for the pipeline, argued that while not physically complete the project had been economically functional, with billions of euros of investments made in good faith.  The ruling implies higher costs and time delays to the consortium, as it suggests it may have to set up a transport operating company and seek bids by third parties to participate in gas auctions.

In a statement on Friday after the German regulator's publication, the consortium said it had one month to evaluate the decision and to consider further action, including an appeal. "International legal experts have confirmed that narrowing the definition of 'completed' to the conclusion of the physical construction of a gas pipeline would violate the protection of legitimate expectations and other fundamental rights in EU law," it said. It said it also considered the ruling in breach of German constitutional guarantees.

Nord Stream 2, designed by Russia's Gazprom to increase direct shipments to Europe, is already long behind schedule and has faced political opposition from the US, Ukraine and Poland, through whose territory Russian gas is currently shipped to consumers in western Europe.

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