EXCLUSIVE Germany requests guarantees of competition on the Nord Stream 2 gas link

The logo of the Nord Stream 2 gas pipeline project is seen on a pipe at the Chelyabinsk Pipe Rolling Plant in Chelyabinsk, Russia on February 26, 2020. REUTERS / Maxim Shemetov // File Photo

  • Nord Stream 2 gas pipeline opposed by the United States and some Europeans
  • Critics say project makes Europe too dependent on Russia
  • The pipeline could lower gas prices
  • Construction is complete, operator says testing has started

DUESSELDORF, October 5 (Reuters) – Germany’s energy regulator has said the Nord Stream 2 pipeline must show that it will not break competition rules by restricting the suppliers who use it and that it will ‘would face a fine if he began pumping Russian gas to Germany without obtaining the necessary approvals.

Nord Stream 2, a project led by Gazprom (GAZP.MM), which has a monopoly on Russian pipeline gas exports, will pump fuel under the Baltic Sea, bypassing Ukraine, which is embroiled in a long-standing territorial dispute with Moscow.

Construction is complete and testing is underway, but the project has encountered opposition from the United States and some European countries who say it will make Europe too dependent on Russian gas, which is roughly a third of European needs.

Opponents also claim that Russia has been pushing to try and speed up the German approval process by not providing additional gas to Europe when the region faces an energy crisis as global demand for gas increases and that prices hit record highs.

The Kremlin says it is fulfilling its obligations.

German regulator Bundesnetzagentur (BNetzA) said Monday evening it had asked the pipeline operator, Switzerland-based Nord Stream 2 AG, to show that it met all regulatory requirements before the pipeline went into service.

“This concerns in particular the problems of non-discriminatory network access and the integration of interconnection in the German market area,” he said, referring to rules aimed in particular at ensuring that the operator does not restrict access to other gas suppliers.

BNetzA, which in September said it had four months to complete certification, said it could not rule out Nord Stream 2 operations could start soon, adding that all technical requirements had been met.

But he said the operator could be fined if he starts before obtaining the necessary certification, which will only be issued if regulatory requirements are also met. Read more

A German government spokesperson said successful certification process was a prerequisite for the pipeline to enter commercial service.

NO PRICE LEAVE

Analysts say Nord Stream 2 is unlikely to significantly lower gas prices which threaten to translate into high bills for European consumers this winter.

On Tuesday, the European Dutch wholesale gas benchmark for November was trading around 117 euros ($ 136) per megawatt hour (MWh), up nearly 500% since the start of the year.

“The start of filling the Nord Stream 2 gas pipeline could have been the fundamental element that the market was waiting for to erase the risk premium on Russian gas. But the market seems to be asking for more,” said analysts at Engie EnergyScan.

Nord Stream 2 announced Monday that it has started testing the pipeline, which has the capacity to pump 55 billion cubic meters (bcm) of gas per year. It runs parallel to an existing Nord Stream pipeline, thus doubling the capacity of the network. Read more

Gazprom, Europe’s largest natural gas supplier, has said it could pump 5.6 billion m3 of gas through Nord Stream 2 by the end of the year. According to data from the European Commission, the EU’s gas consumption in the first quarter of 2021 rose to 132 billion cubic meters, up 10 billion cubic meters – or 7.6% – from a year ago a year.

The German Economy Ministry must also carry out an assessment before the regulator can send its recommendation to the European Commission. The EU executive has two months to respond once it has received a submission.

The pipeline operator said: “Nord Stream 2 will continue to make every effort to ensure compliance with all applicable rules and regulations.”

He also said he had appealed a German court ruling in August which ruled that the pipeline was not exempt from EU rules requiring pipeline owners to be different from gas suppliers who crosses them. Read more

Nord Stream 2 says these EU rules, which were changed in 2019, were aimed at stopping the project.

($ 1 = 0.8627 euros)

Reporting by Tom Kaeckenhoff and Christoph Steitz; Additional reporting by Nina Chestney in London, Markus Wacket and Andreas Rinke in Berlin and Oksana Kobzeva and Vladimir Soldatkin in Moscow; Editing by Sonya Hepinstall, Edmund Blair and Barbara Lewis

Our standards: Thomson Reuters Trust Principles.

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