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15 May, 2020 14:03

Nord Stream 2 to challenge German regulator’s decision denying waiver of 'discriminatory' EU rules for gas pipeline from Russia

Nord Stream 2 to challenge German regulator’s decision denying waiver of 'discriminatory' EU rules for gas pipeline from Russia

The company building the Nord Stream 2 gas pipeline has vowed to appeal Germany’s refusal to remove the multibillion-dollar project from the restrictions laid out in the “discriminatory” EU Gas Directive.

The latest amendment to the EU rules was greenlighted in April last year, long after Nord Stream 2 construction began. The legislature made the rules governing the European gas market apply to all pipelines to and from third countries. The new rule means Russia’s Gazprom, which designed the project, will be allowed to use not more than 50 percent of the pipeline capacity while allowing third parties to use the rest of it.

In a ruling published on Friday, the German energy regulator, Bundesnetzagentur, said that the massive project, meant to pump natural gas from Russia to Germany, is not exempt from the amended European rules known as the Gas Directive. It said that, to qualify for an exemption, the pipeline should have been completed by May of last year. 

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“Since the Nord Stream 2 pipeline had not been fully laid by 23 May 2019, the Bundesnetzagentur has rejected the application for derogation made by Nord Stream 2 AG,” it said in a statement. “When it is put into operation, therefore, Nord Stream 2 will be subject to German regulatory requirements and European rules on unbundling, network access and cost regulation.”

Shortly after the ruling came to light, Nord Stream 2 AG vowed to use its right to appeal the decision in German courts. According to the operator’s spokesperson, the rejection of the application shows the “discriminatory” effect of the amended EU rules. However, this does not affect the completion of the pipeline, according to the official.

The Nord Stream 2 consortium argues that the project was economically completed by the date required to be granted a waiver. Long before Brussels decided to amend the rules, the company had invested €1 billion into the project. In contrast, the German regulator’s ruling is based on the technical completion of the project. 

“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,” the company said.

The Nord Stream 2 pipeline was initially meant to be completed by the end of 2019, but the project has not been finalized so far, owing to US sanctions. Washington’s threats forced Swiss-Dutch company Allseas to pull out from the project in December. 

However, Russia vowed to complete the project on its own. A pipe-laying vessel has already arrived in Germany, after making a long journey from Russia’s far east. The Akademik Cherskiy, a pipelayer owned by Gazprom, is now moored at the port of Mukran, according to MarineTraffic data, and may soon start laying the final section of the pipe.

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