German agency suspends approval process for Russia’s pipeline

BERLIN (AP) – Germany’s network regulator said on Tuesday it had suspended its procedure to certify the operator of a new pipeline that would bring Russian gas to the country under the Baltic Sea due to a problem with the company’s status under German law.

Construction of the Nord Stream 2 pipeline was completed earlier this year, but it is not yet operational – and Tuesday’s development reinforced expectations that it will not be for some time yet. Ukraine and the United States have opposed the project and it is being closely monitored due to tight natural gas supplies in Europe.

Last month, Russian President Vladimir Putin said the country could quickly increase its natural gas supply to the EU once German regulators allow the new pipeline to start operating. Energy prices have risen in Europe, which imports much of its natural gas from Russia, and have led to pain for businesses and households.

It was not immediately clear to what extent the action taken by the German network regulator, the Bundesnetzagentur, to suspend the procedure for certifying Nord Stream 2 AG as an independent transmission operator could delay the start-up of operations. The step is required before gas can legally flow.

“After a thorough examination of the documentation, the Bundesnetzagentur concluded that it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organized in a legal form under German law,” the regulator said in a statement.

The operating company is based in Zug, Switzerland, and “has decided not to transform its existing legal form, but instead to set up a subsidiary under German law, which will exclusively control the German part of the pipeline,” it added. It becomes the owner and operator of the German part of the pipeline.

The agency said the certification will remain suspended “until the main assets and human resources have been transferred to the subsidiary” and it can confirm that the documentation is complete.

Nord Stream 2 AG said it could not comment on the details of the procedure, its possible length and any effects on the pipeline’s operational start, the German news agency dpa reported.

The certification issue is “another reason to expect that the pipeline will not start commercial operation until around mid-2022,” said Carlos Torres Diaz, head of gas and electricity markets at energy research firm Rystad Energy.

Given the time required to resubmit the documentation, the pipeline would not supply commercial quantities of gas to Germany “until the end of winter,” he said.

Owned by the Russian-controlled gas giant Gazprom with investments from several European companies, Nord Stream 2 was built under the Baltic Sea and bypasses Poland and Ukraine, raising objections from these countries.

The United States has strongly opposed the construction of Nord Stream 2, but in July reached an agreement with Germany to allow the pipeline to be completed without imposing sanctions on German units.

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