Nord Stream 2 receives German legal setback

Germany’s Higher Regional Court has rejected Nord Stream 2 AG’s application to be excluded from European Union rules requiring natural gas pipeline operators be companies other than those who supply the gas shipped. Polish state gas company PGNiG SA and its affiliate PGNiG Supply & Trading GMBH (PST) had argued that Nord Stream 2 did not qualify for derogation from this EU requirement because it had not been completed before the amendment enacting it had come into force, May 23, 2019.

Germany’s Federal Network Agency on May 15, 2020, used the same grounds to reject Nord Stream 2’s request for exemption, with the pipeline company then appealing to the Higher Regional Court. The court’s ruling can be appealed.

On June 11, 2021, Nord Stream 2 applied to the German regulatory authority for certification under the preferential independent transmission operator (ITO) model. PGNiG and PST have submitted an application for admission to the procedure as well, presenting preliminary arguments that there are likewise no legal grounds for granting certification under ITO.

The Gas Transmission System Operator of Ukraine LLC (GTSOU) has subsequently called on the EU to thoroughly review Nord Stream 2’s ITO application, alleging anticompetitive behavior. GTSOU earlier this month said that Poland and Ukraine could ensure Eastern European energy security without Nord Stream 2, citing 100 billion cu m/year (bcmy) of spare capacity without the project.

Nord Stream 2 is a twin pipeline running on the bed of the Baltic Sea 764 miles from Vyborg, Russia, to Lubmin, Germany, with a capacity of 55 bcmy, the same as Nord Stream 1 which it would generally parallel. Its construction is largely completed.