Germany suspends certification of Nord Stream 2

RUSSIA / FSU POLITICS - In Brief 16 Nov 2021 by Alex Teddy

On November 15 Berlin said it cannot continue the process until a German company is established to manage the pipeline. Nord Stream 2 AG is a Swiss-registered company that currently owns the pipeline. The company can establish a German subsidiary, and that will satisfy Germany's demand. The assets and human resources will need to be transferred to the subsidiary. The pipeline must be approved by Germany before it can pump gas from Russia to Germany.

Gazprom share prices fell 2% when the news was announced. Spot prices for gas in the EU leapt up 5%.

The pipeline suffered many delays. This was due to US sanctions as well as other obstacles.

Bundesnetzagentur is the German Government agency responsible for certifying the pipeline. The EU is facing an energy shortage.

The agency has four months to review the documents before it gives its ruling on approving the pipeline.

France, the US and Poland oppose the pipeline. The US is not taking any additional action against the pipeline in return for a pledge by Germany to remain a stalwart ally of Ukraine.

Ukraine stands to lose USD 2 billion in transit fees as Russian gas will no longer cross Ukrainian soil. Kyiv is worried that EU dependence on Russian gas will mean that Moscow can dictate EU foreign policy.

When Nord Stream 2 starts to function, 60% of Russian gas exports to Europe will be carried by pipelines. There is already a functioning pipeline carrying gas under the Baltic Sea to EU to Germany.

The German need for gas has increased because following the Fukushima Disaster in Japan in 2011 Germany chose to phase out nuclear power stations.

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