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Nord Stream 2 operator may challenge decision of German regulator on Gas Directive

The Nord Stream 2 AG spokesperson stressed that the rejection of the Nord Stream 2 application shows the discriminatory effect of the amended EU Gas Directive

MOSCOW, May 15. /TASS/. Nord Stream 2 AG, operator of the Nord Stream 2 project, does not rule out filing an appeal against the decision of the Federal Network Agency of Germany, which refused to remove the gas pipeline from the scope of restrictions established by the EU Gas Directive, a spokesperson with Nord Stream 2 AG told TASS.

The German regulator explained its decision stating that the request of Nord Stream 2 AG does not comply with the effective norms. According to the current rules, only those pipelines can be eligible for exemption from restrictions, the construction of which was completed by May 23 2019.

Company’s stance

"Nord Stream 2 AG does not agree with this decision and insists that in terms of economic functionality the pipeline was completed by the actual date of May 23, 2019. Based on the legal framework that was effective at that time, the company made an irrevocable investment of 1 billion euro long before the EC announced its plan to amend the Gas Directive," an official with Nord Stream 2 AG stressed.

According to Nord Stream 2 AG, international legal experts confirmed that "narrowing the definition of "completion of the project" to the confirmation of the physical construction of the pipeline would violate the protection of legitimate expectations and other fundamental rights in the EU law," and also contradicts the constitutional guarantees of the German basic law.

The operator stated that Nord Stream 2 is a project that has received all the necessary permits and is being implemented in accordance with applicable national and international laws.

"The ongoing procedures (of derogation, litigation in the EU court, arbitration court under the Energy Charter Treaty) are called upon to clarify the rules that will be applicable to the operation of the Nord Stream 2 gas pipeline. The need for such a clarification arose as a result of the adoption of amendments to the EU Gas Directive, which unlawfully discriminate the project, as well as a lack of assessment of its impact, which is usually a mandatory procedure until the introduction of new legislation of the European Commission," the official noted.

"We expect reception of a formal decision, then we will assess it and consider further steps to protect our rights, including appealing this decision in German courts. An appeal is possible within one month after the decision is made," the spokesperson said.

The official also stressed that the rejection of the Nord Stream 2 application shows the discriminatory effect of the amended EU Gas Directive. However, the decision will not affect the completion of the pipeline, the official added.

Impact of the Gas Directive on the project

Amendments to the EU Gas Directive were approved in April 2019. They imply that the key principles of regulating the European gas market should be applied not only to land, but also to offshore pipelines in the territorial waters of the EU states.

One of the key principles is that a gas producing company cannot simultaneously own the pipeline through which its gas is delivered. Another requirement concerns other gas suppliers’ access to the pipeline. For Gazprom it means that it will be able to use only half of the pipeline’s capacity.

About project

The Nord Stream 2 pipeline is set to run from the Russian coast along the Baltic Sea bed to the German shore through the exclusive economic zones and territorial waters of five countries — Russia, Finland, Sweden, Denmark, and Germany, thus bypassing transit countries of Ukraine, Belarus, Poland and other Eastern European and Baltic states. Each of the pipeline’s two stretches will have a capacity of 27.5 bln cubic meters. Gazprom's European partners in the project are Germany’s Wintershall and Uniper, Austria’s OMV, France’s Engie and Royal Dutch Shell.

The Switzerland-based Allseas, which laid pipes for the Nord Stream 2 pipeline, suspended its pipelay activities and withdrew vessels involved in the project due to the threat of the US’ sanctions in late December 2019.

Chief Executive Officer of Gazprom Alexei Miller said earlier that the construction would be completed using the company's own capacities. Russian Energy Minister Alexander Novak said that the construction of the gas pipeline may be finalized using the ship-laying vessel ‘Akademik Chersky’.