Nord Stream 2: is the BNetzA about to jink to save the pipeline?

One should not interpret recent media reports to the effect that the Nord Stream 2 project is in peril, writes Alan Riley. The German energy regulator the Bundesnetzagentur (BNetzA) it is reported may not grant Nord Stream 2 a derogation from EU energy liberalisation regime, contained in the gas directive 2009. Such a failure to obtain a derogation from the BNetzA, even if that is its final decision, is likely to prove far from fatal to Nord Stream 2.

"It is therefore possible that the entire focus on the derogation procedure over the last few months, and the media reports that the BNetzA does intend to adopt to grant a derogation to the pipeline is all part of a bait and switch operation. Emphasise over several months the prospect of a derogation being granted, at the last moment, pull the prospect of a derogation and instead take a decision that looks like compliance with EU law. In reality the new decision does not comply with Union law either but it is not a derogation decision. As a consequence although it also seeks to subvert Union law, it will not immediately bring down the full weight of the EU infringement procedure upon the BNetzA and the government in Berlin.

There are a number of options for Nord Stream 2 for something that looks like a measure that complies with EU law, but is really nothing of the sort. For example, last year before the discussion surrounding the derogation procedure took hold there was a discussion amongst advocates of the Nord Stream 2 pipeline that one option would be to focus application of EU law solely to the ‘stub’ of the pipeline. The stub is the 55km of pipeline solely in German territorial waters. The stub argument is essentially that EU law only applies to the pipeline in EU territory, the rest of the pipeline remains free of Union law and can be owned and controlled by Gazprom.

The stub would be fully compliant with EU energy liberalisation law and in particular the EU’s gas directive. There would even be no need for an exemption as that part of the pipeline will be subject to ownership unbundling. The pipeline would be owned by a EU owner unconnected with Nord Stream 2 and Gazprom. It would comply with third party access rules. However, no one but Gazprom would be able to access the stub from international waters and it would set a transparent tariff regime but conscious it would have only one source of supply from Gazprom.

Such a ‘stub’ project would be a legal sham. There is only one single pipeline running from Russian Federation territory to German territory. It was designed, planned and route permits were obtained on the basis of it being one pipeline. The majority of the pipeline outside German and EU territorial waters has no purpose or value save in relation to the physical connection with that part of its pipeline within EU territory. One can legitimately apply the territoriality principle in allocating jurisdiction in public international law as a consequence of the pipeline’s fixed connection to infrastructure in EU territory permitting the full application of Union law to the pipeline.

However, from a PR perspective opting for the stub approach has the merit of being more easily able to defend in the media. It is much easier for the German authorities to present the application of EU law to the stub as reasonable application of Union law, than participate in what would amount to an overt breach of Union law, by granting an unwarranted derogation to Nord Stream 2.

Applying EU law to the stub would create a legal framework to the pipeline which can then be defended over the next few years through the EU’s judicial hierarchy. In parallel, the pipeline can be completed and can be functioning. The facts on the ground will have been put in place with the aim of then minimising any subsequent application of Union law to an already functioning pipeline."

You can read the rest of the very interesting piece via the below link:

https://icds.ee/nord-stream-2-preparing-for-the-bait-switch/

 

 

German Federal Network Agency: no derogation from gas directive for Nord Stream 2

https://www.bundesnetzagentur.de/EN/Service-Funktionen/RulingChambers/Chamber7/BK7-20-0004EN/BK7-20-0004EN.html?nn=269738The Federal Network Agency of Germany (Bundesnetzagentur) has decided in a decree yet to be published that it won't grant any derogation from the EU-Gas-directive to the controversial Nord Stream 2 pipeline:

"The Bundesnetzagentur has today rejected the application of Nord Stream 2 AG for derogation from regulation for the section of the Nord Stream 2 pipeline located in German territory.

Pipeline not completed

The section of a gas interconnector involving a third country located in German territory can be granted a derogation from regulatory requirements upon application and under certain conditions. For this, it is necessary that the gas interconnector was completed before 23 May 2019.

Since the Nord Stream 2 pipeline had not been fully laid by 23 May 2019, the Bundesnetzagentur has rejected the application for derogation made by Nord Stream 2 AG. 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 responsible ruling chamber of the Bundesnetzagentur understands the term "completion" in a constructional/technical sense. The applicant, by contrast, believes it to mean completion in an economically functional sense and refers to the investment decision, which was made well before 23 May 2019.

Nord Stream 2 AG can appeal and have today's decision examined before a court.

Responses to the proceedings

All European Union Member States had the opportunity to examine Nord Stream 2 AG's application, with its annexes, and to submit a response. Responses to the consultation were taken into account in the decision, as was the joint statement submitted by PGNiG S.A. and PGNiG Supply & Trading GmbH, which were summoned to the proceedings upon application in a decision of 18 March 2020.

Neither any of the Member States nor the parties summoned shared the viewpoint of Nord Stream 2 AG as regards the term "completion".

Background

Since the amendment of the Gas Directive 2009/73/EC, the European regulatory provisions have also applied to interconnectors between a Member State and a third country. The new European provisions were transposed in the German Energy Industry Act (EnWG), which entered into force on 12 December 2019.

Subject to the conditions of the amended section 28b EnWG, the section of a gas interconnector with third country involvement located in German territory is to be granted a derogation from regulatory requirements provided it was completed by the relevant date and the other conditions under subsection 1 of the provision have been met.

A version of the decision from which confidential information has been removed will be published shortly at www.bundesnetzagentur.de/BK7-20-004 under the file number BK7-20-004.."

More information to come on the site of the Bundesnetzagentur.

https://www.bundesnetzagentur.de/SharedDocs/Pressemitteilungen/EN/2020/20200515_NordStream2.html;jsessionid=D3E9ED2D32B0B4F2C4D2206AFCD3B401?nn=265794

Germany rejects exemptions from EU-gas-directive for Nord Stream 2

TASS: Nord Stream 2will not be exempted from EU-gas-directive and will need to comply with EU regulations that might delay the project and undermine its feasibility.

https://tass.ru/ekonomika/8479385

German parliament adopts controversial law on Nord Stream 2

The Bundestag has finally adopted the bill that implements the EU gas directive into german law.

This bill was contentious because it grants an exception to the stipulation of the EU gas directive according to which gas supplier and pipeline operator have to be separated which is not the case of Nord Stream 2, since both supplier and pipeline operator are under control of russian state owned enterprise Gazprom.

After a failed attempt to vote the bill last week, the parliament finally gathered the neccessary quorum.

Only the Green party (Die Grünen) opposed the vote.

More information in the below article:

https://www.bild.de/politik/2019/politik/nord-stream-2-bundestag-gibt-putin-pipeline-gruenes-licht-66020156.bild.html

Vote of controversial Nord-Stream-2-bill failed

The vote on a bill that would allow exceptions for controversial gas pipeline Nord Stream 2 from conisting EU law failed due to the fact that german parliament, the Bundestag, couldn't gather the necessary quorum to do so.

Interestingly enough the initiative to abort the vote emanated from the party AfD close to the Kremlin.

The attempt of the AfD-lawmakers is not only to thwart the bill but the EU-gas-directive itself with the aim to pave the way to a rapid completion of the pipeline.
The curious reasoning of the AfD is that the EU gas directive is infringing EU law. From the point of view of the AfD the EU is only competent for the European Single Market, not for pipelines from third-party states that dock on the national territory of a EU-member-state.

The vote is rescheduled to a date in approximately two weeks.

See more information here:

https://www.bild.de/bild-plus/politik/ausland/politik-ausland/abstimmung-scheiterte-um-2-08-uhr-nacht-krimi-um-nord-stream-2-im-bundestag-65903560.bild.html

German government tricks in order to get Nord Stream 2 going

German newspaper Bild has obtained drafts of a federal bill that significantly softens the requirements of EU law on the permit for natural gas pipeline Nord Stream 2.

The provisions of the EU gas directive stipulate that a third-state (i.e. a non-EU-state) pipeline-operator cannot be simultaneously the gas supplier.

The only exception to this rule applies to pipelines that have been completed before May 23rd 2019.

However Nord Stream 2 is not yet completed (even though the last obstacle has been removed with danish energy authority giving approval to the transition of the pipelin through Denmark's exclusive economic zone) and won't be before 2020.

Thus, the exception of the EU gas directive does not apply to Nord Stream 2. In consequence with public corporation Gaszprom as gas supplier and pipeline operator Nord Stream 2 AG under control of Gazprom, the controversial pipeline could not be powered up.

Nevertheless german government tries to override those rules in order to get Nord Stream 2 going.

The text of the bill softens the requirement of "completion before May 23rd 2019" to the "accomplishement of major investments transacted before May 23rd 2019". The 2 Bn EUR invested by german companies in this project apparently turned the balance.

The government of Angela Merkel has scheduled the vote of this bill on Friday morning, 2:25 a.m.

According to information by Bild, the EU-Commission views this bill as a violation of the EU gas directive and has announced a possible veto against this exception for Nord Stream 2, should the bill be adopted.

Deutsch-französische Misshelligkeiten um Nord Stream 2

Während die Fertigstellung der umstrittenen Unterwasserpipeline "Nordstream 2" nunmehr Kurs auf die Zielgerade nimmt, werden von Deutschlands europäischen Nachbarn Einwände angemeldet.

Die baltischen Staaten, aber auch Polen und vor allem die Ukraine haben das Projekt, mit dem Deutschland jährlich 55 Milliarden Kubikmeter Gas – zusätzlich zu den bisher 51 Milliarden Kubikmetern, die durch "Nordstream 1" fließen – direkt aus Russland importieren will, mit großer Skepsis betrachtet, da es ihre Energie- und Sicherheitsinteressen beeinträchtigt.

Der Energieexperte Wojciech Jakóbik skizzierte gegenüber dem Verfasser die lagerübergreifend vorherrschende Position in Polen, indem er "Nordstream 2" als politische und ökonomische Bedrohung. In politischer Hinsicht führt sie zur Spaltung Europas und könnte zudem ein Erpressungspotential gegenüber der Ukraine bedeuten. Ökonomisch führt die Pipeline dazu, dass die Nachfrage aus einer dominierenden Quelle befriedigt wird, was den Markt verzerrt und ihm schadet.