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    Nord Stream 2 Loses Court Case over EU Gas Rules: Update


Nord Stream 2 has two months in which to file an appeal.

by: Joseph Murphy

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Nord Stream 2 Loses Court Case over EU Gas Rules: Update

(Updates with comments from Nord Stream 2 operator)

The General Court of the EU said on May 20 it had rejected challenges brought by the Gazprom-owned operators of the Nord Stream 1 and 2 projects against changes that impose EU gas market rules on them.

The ruling comes days German regulators denied Nord Stream 2 a waiver from the rules, which will require Gazprom to cede control of the pipeline, ensure third-party access to its capacity and set transparent tariffs.

Brussels brought into force a gas directive amendment in May last year seeking to impose EU third energy package rules on gas pipelines running to and from third countries, such as Nord Stream 1 and 2. Germany, which receives both pipelines, later transposed the legislation.

Gazprom sought to get the gas directive amendment annulled at the EU's general court, with the Swiss-based Nord Stream 2 operator arguing that the new obligations would require it to sell the entire 55bn m3/yr pipeline or "entirely alter its organisational and business structure," weakening the project's investment rationale. But the court said the directive changes did not directly affect Nord Stream 2, as they had to be transposed and applied with some discretion by member states. Therefore its complaints should be brought up at a national level. 

Nord Stream 2 told NGW it was analysing the ruling and had two months in which to file an appeal.

"It is important to note that the ruling only concerns procedural questions, including in particular of admission to the court. The court has not rejected our claim on substance, in particular that the amendment of the gas directive constitutes an unlawful discrimination of Nord Stream 2. Therefore, we maintain our claim," the operator said. "It is interesting to see that the EU Court points to the possibility for Nord Stream 2 to appeal via the German courts and have the case referred to the Court of Justice of the EU."

The amended gas directive only applies to pipelines that were completed after it came into force on May 23 2019. Gazprom had requested an exemption from the rules in Germany, arguing that Nord Stream 2 should be treated as having been finished at this point, as it was a finalised investment and construction was already at an advanced stage.

However, German network regulator Bundesnetzagentur rejected this reasoning.

"Since the Nord Stream 2 pipeline had not been fully laid by May 23 2019, the Bundesnetzagentur has rejected the application for derogation made by Nord Stream 2," the regulator said in a ruling on May 15. "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."

The Bundesnetzagentur said on May 20 that it had, however, granted an exemption to the Nord Stream 1 pipeline.

Nord Stream 2 was originally scheduled for completion before the end of 2019 but the project was delayed, first because of permitting issues in Denmark and then by US sanctions, which forced Swiss contractor Allseas to halt pipelaying work in December. Russian president Vladimir Putin has said it should start pumping gas in early 2021.

Only 6% of Nord Stream 2's offshore section is left to complete, and Gazprom is expected to use its own pipelayer, the Akademik Cherskiy, to finish the work. The vessel left the Russian Far East in February and has since journeyed across the Asia-Pacific and around Africa and into European waters.

On May 11 the ship arrived at the German port of Mukran, which Gazprom has been using over the years to store Nord Stream 2 pipes. Ship-tracking data shows that it is still stationed there.