Germany allows Poland to decide the fate of Nord Stream 2 pipeline

German regulatory office for electricity, gas, telecommunications, post and railway market, Bundesnetzagentur has allowed Poland to participate in the consideration of the application to exclude Nord Stream 2 from the rules of the new EU Gas Directive. This issue is key for the future of the project, as European regulations can severely restrict gas supplies through the Nord Stream 2 gas pipeline.

Last year, the European Commission approved new changes to the EU Gas Directive. Now the Third Energy Package also includes gas pipelines from third countries, including Nord Stream 2, built after May 23, 2019. For the project, this means that the gas supplier cannot be the owner of the pipeline, and some of its capacity must be reserved for independent suppliers. In other words, European rules can limit the operation of the pipeline to half the capacity, which will make it unprofitable.

Therefore, the operator of the Nord Stream 2 AG project submitted an application to the German regulator for an exception to the rules of the Gas Directive.

According to the Polish business publication Biznesalert, Bundesnetzagentur allowed the Polish state-owned company PGNiG to express its opinion during the consideration of the application. "In the meantime, the European Commission needs to investigate whether the project complies with European laws before it is launched," writes Biznesalert .

According to the publication, the launch of the pipeline should not take place until the European Commission compliance review and review of the application in Germany are complete

"Under this scenario, Nord Stream 2 will stand idle for some time and its undelivered gas will weigh on the budget of the operator Nord Stream 2 AG, which is wholly owned by Gazprom," writes Biznesalert editor-in-chief Wojciech Jacobik.

He recalled how Poland was able to get the land extension of the first Baltic gas pipeline in Germany, Opal, to fall under the rules of the EU Gas Directive. In September 2019, Poland's PGNiG was able to prove that the energy solidarity of the EU countries had been violated, and Opal has been operating only at half the capacity since then.

"The Polish oil and gas company and the Polish government have consistently pointed to the negative impact of Nord Stream 2 to the security and fair competition in the gas market in Central and Eastern Europe. Including us into the review procedure will help us protect the interests of PGNiG and gas consumers. North Stream 2 should not be granted an exception to the rules,"  said PGNiG’s President Jerzy Kwieciński , according to the company's press service.

The construction of Nord Stream 2 stopped at the end of December last year after the U.S. imposed sanctions which prohibit foreign shipowners from participating in the Russian energy project. Therefore, Russia can complete the project and lay the remaining 160 kilometers of gas pipeline mainly in the Danish waters of the Baltic Sea only on its own. Russian President Vladimir Putin has stated that Nord Stream 2 is scheduled to be completed by the end of 2020 or the first quarter of 2021.

  PGNiG, Nord Stream, Germany, Gazrom, Russia