Germany Halts Nord Stream 2 Certification, EU Gas Prices Jump Again

Media reports say the pipeline’s launch could be delayed until March.

Germany has suspended the certification process for the Russian Nord Stream 2 gas pipeline because the pipeline’s operating company does not comply with German law.

Following reports of the suspended certification, EU natural gas prices rose again above $1,000, and a Reuters source said the pipeline’s launch could be delayed until March 2022.

Certification suspended

Germany’s Federal Network Agency has temporarily suspended the certification process for Nord Stream 2 AG as the operator of the Russian Nord Stream 2 gas pipeline.

“After a thorough review of the documentation, the agency has concluded that the operator of the Nord Stream 2 pipeline can only be certified if it is organized as a legal entity under German law,” the statement says.

It is noted that Nord Stream 2 AG, based in Switzerland, has decided not to change its existing legal form and instead to establish a subsidiary under German law solely to manage the German section of the pipeline.

“This subsidiary must become the owner and operator of the German section of the pipeline. The subsidiary must then meet the requirements for an independent transmission operator, as set out in Germany’s Energy Industry Act,” the agency explained.

The certification procedure will be suspended until the main assets and human resources are transferred to the subsidiary, and the agency cannot verify whether the documentation resubmitted by the subsidiary as a new applicant is complete.

It is explained that once these requirements are met, the agency will be able to resume its review within the remaining four-month period set by law, prepare a draft decision and submit it to the European Commission for a final decision, as provided for in EU internal market legislation.

Following reports of the suspended certification, gas prices at Europe’s main TTF hub in the Netherlands exceeded $1,000 per thousand cubic meters for several hours.

The process could be suspended until May

The German regulator’s decision to suspend licensing of the Nord Stream 2 pipeline from Russia to Germany may delay the commissioning of the infrastructure until March of next year, Reuters reported, citing sources in the German government.

“I expect the launch of Nord Stream 2 could be delayed until March 2022,” a source in the German government said.

Before the suspension, this process was due to be completed in January, and the German regulator’s recommendation was then to be submitted for review by the European Commission. 

The source cited the need for Gazprom to create a limited liability company under German law, adding that Gazprom has said it will begin doing so.

Sources said Germany insisted that Gazprom comply with German and EU laws and warned against illegal gas sales.

“Russia has promised additional gas volumes if Nord Stream 2 opens,” said Hanns Koenig of the research firm Aurora. “But there is an option for duty-free transit through Belarus and Ukraine, so more gas could flow here than now.”