Nord Stream 2: operator ramps up pressure, fills pipeline with gas

 Despite the fact that the controversial pipeline still doesn't have the necessary operating licence, the pipeline is being flooded with gas "to establish the necessary line pressure", as the operating company puts it, writes WELT:

The operating company of the controversial Baltic Sea pipeline Nord Stream 2 started filling the second line on Friday. According to the company, this is intended to build up the technical line pressure required for the gas flow.

“The pre-commissioning work on the second line was successfully completed to ensure the integrity of the pipeline,” explained the Swiss-based subsidiary of the Russian state monopoly Gazprom. The pipeline was "built in accordance with applicable technical and industrial standards and independently certified".

The early filling of the pipelines at a time of extremely high gas prices is surprising, as the operating license for the pipeline will still be months away. The Federal Network Agency (BNetzA) had suspended the approval process for pipeline operation for the time being because Gazprom had not yet implemented the formal conditions of the European gas directive.

According to the European competition rules, the owner and user of a line monopoly must not be identical. Gazprom must therefore set up an operating company that is formally and personally independent in accordance with the German legal form in order to meet this requirement. Only then can the certification of the gas pipe be completed.

Gazprom is working on the implementation. But decisions will probably "not be made in the first half of the year", said the President of the Federal Network Agency, Jochen Homann, with a view to 2022. The process will continue as soon as the necessary documents are submitted in such a way that "they can be checked" - but that alone has Nord Stream 2 AG in hand.

The BNetzA is under political pressure from various sides. Opponents of the project, including the USA, are demanding that the federal government not allow the line to go into operation for geopolitical reasons. Several EU countries are also calling on Germany to use the pipeline in the Ukraine conflict as a means of pressure against Russia.

Supporters of the pipeline project therefore suspect that the approval process of the Federal Network Agency could drag on longer than is actually necessary due to this political pressure. Some want to see the formulation of the BNetzA president as an indication that time leeway should be used to the maximum. Homann had pointed out that after the examination by the BNetzA, the whole thing would still go to the European Commission. This has "a lot of time to deal with it again".

If Gazprom is already filling the pipeline between St. Petersburg and Greifswald with gas, that could - intentionally or only as a welcome side effect - exert counter pressure on the licensing authority. Because gas prices in Germany and Europe are currently at a record level. In addition, a physical shortage of gas cannot be ruled out for industrial companies and power plant operators.

Operators of gas power plants in Germany are already warning of the increased risk of business interruptions due to a lack of gas deliveries this winter. The industry association “Trading Hub Europe” (THE), which is responsible for the gas supply, is also trying to organize additional gas volumes especially for Bavaria for February by means of a “special tender”.

If there were physical supply bottlenecks in Germany in the event of an extremely cold and long winter, politicians could come under pressure to justify why gas volumes from Nord Stream 2 are not used that are already physically available at the landing point Greifsland on German territory.

How sensitive the gas market is with regard to the politically sensitive supply situation was shown recently by reactions to a statement by the Federal Foreign Minister. Annalena Baerbock (Greens) had pointed out that "as things stand, this pipeline cannot be approved because it does not meet the requirements of European energy law." Market participants and media representatives misinterpreted as a political declaration of intent.

As a result, gas prices in European wholesale rose significantly over several days. Chancellor Olaf Scholz (SPD) only pointed out at the end of this week that Baerbock's statements had been misunderstood: The commissioning of the pipeline was not a political question, Scholz made clear: For commissioning, compliance with European law was only required in one sub-aspect clear up. "An authority in Germany decides on this quite apolitically."

Nord Stream 2: operating licence denied

 Bad news for Gazprom. German Federal Network Agency (Bundesagentur) has denied the operating licence on the motive that the operating company must be organised according to german law. Nord Stream 2's operating company however is a company registered in Switzerland under swiss law. Read more in BILD:

Not a good day for Kremlin leader Vladimir Putin (69) and his gas manager Gerhard Schröder (77, Gazprom / Nord Stream, Rosneft): The Federal Network Agency is temporarily stopping the approval process (certification) for the second Baltic Sea pipeline Nord Stream 2!

► No operating license without certification!

► No gas transport without the permit!

Not a good day for Kremlin leader Vladimir Putin (69) and his gas manager Gerhard Schröder (77, Gazprom / Nord Stream, Rosneft): The Federal Network Agency is temporarily stopping the approval process (certification) for the second Baltic Sea pipeline Nord Stream 2!

► No operating license without certification!

► No gas transport without the permit!

Nord Stream (main owner: Gazprom) now wants to found a new German subsidiary that will then operate the German part.

Basic problem for Nord Stream: Even if Germany allows the tube, the EU has the last word! And there is considerable doubt that Nord Stream 2 complies with EU law. Because according to the EU Energy Directive, line operators and energy suppliers cannot be in one hand. In the case of Nord Stream 2, however, both are in the hands of the Kremlin group Gazprom. The network agency has until January 8th to make a decision.

Nord Stream 2: gas shortage and uncertainty about Gazprom's plans

 While russian president Vladimir Putin ordered the gas producers to fill the gas reservoirs in Germany and Austria the concrete results are long time in the coming. This behaviour confirms some observers that this move is destined to coerce german authorities to issue the operating licence to Nord Stream 2. Read more in this WELT article: 

The energy consumers in Germany have to wait for the announced additional natural gas from Russia. Data from the network operator Gascade shows that in Mallnow, Brandenburg on the Polish border, where the Yamal pipeline from Siberia arrives, no Russian natural gas arrived at all by Monday evening, reports "Spiegel".

The Russian newspaper "Kommersant" also confirmed that Russian gas deliveries have so far only increased slightly. “Gazprom has started at a very moderate pace to implement Vladimir Putin's order to replenish European storage facilities from November 8th. Even though the company has pumped gas into the storage facilities again in the past few days, it has not significantly increased deliveries via Ukraine and has not yet resumed transport through the Yamal-Europe gas pipeline. "

After months of the energy crisis, gas customers in Europe were actually hoping for additional energy supplies from Russia as of the month of the month. It has been almost two weeks since Russian President Vladimir Putin, under pressure from rising prices and poorly filled storage facilities, instructed the state gas giant Gazprom to replenish the reserves in Germany and Austria. First the domestic supplies should be replenished. But then Gazprom should also open the valves for Europe further.

Russia's state media cheered that Putin was the “savior in the gas crisis” and was protecting the EU from the cold shock. On Monday, a spokesman for Putin confirmed that the order was in place for Gazprom to deliver more than the agreed mandatory quantities after November 8th. Ukraine, meanwhile, reported an increase in transit to Europe compared to the past few days. Accordingly, the daily amount rose to 88 million cubic meters of gas, most recently it was around 60 million cubic meters. There was initially no reaction from Gazprom.

The Federal Association of Energy and Water Industries had also welcomed Moscow's announcement. At the end of October, according to the association, the plants supplied by Gazprom in Germany were only 21 percent full, below average compared to other gas storage facilities.

Meanwhile, there is still great anger in Russia over allegations that the country is driving up prices by withholding gas. As Russia's most important woman in gas exports, Jelena Burmistrowa has just decidedly rejected responsibility for the energy crisis on the international stage. At a conference in Amsterdam earlier this month, the head of Gazprom-Export said anyone who “speculates about Gazprom's malicious acts” is far from reality.

Russia kept pointing out that there was a gas crisis around the world. The reasons lie in the recovery of the economy after the restrictions caused by the pandemic. There is a hunger for energy, especially in Asia. Last but not least, the US would have preferred to deliver additional liquefied gas there and not to Europe, said Burmistrowa.

Kremlin chief Putin had accused the Europeans of neglecting to properly fill their gas storage facilities after a cold winter. To make matters worse, because of the slack wind in the North Sea, the wind turbines produced less electricity there. More gas had to be converted into electricity. This also reduced storage reserves.

Nonetheless, Russia found itself exposed to political accusations in Germany and other EU countries that deliveries were in short supply in order to bring about the rapid commissioning of the finished Nord Stream 2 pipeline in the Baltic Sea. The Kremlin urged that Nord Stream 2 could ease the situation. But Moscow also stressed that regardless of this, all agreed quantities would be delivered. Customers in the West also confirmed that Russia delivers reliably.

It is not at all disputed that the raw materials giant is fulfilling its contracts. Rather, the point of contention is whether Russia is really doing everything it can to deliver additional quantities. Putin himself made it clear that there were limits for him. For example, Gazprom wants to do without Ukraine, which has long been the most important transit country for Russian gas deliveries to Europe.

The route through Ukraine is longer and therefore more expensive; In addition, the Ukrainian transmission network was ailing and could not withstand the higher pressure from the transit, explained Putin. Ukraine's offers to lower the fees came to nothing. The impoverished country urgently needs the income from transit.

As Vice President of Gazprom, Burmistrowa also stated at the Amsterdam conference that Russia was not interested in extremely high gas prices. The “record prices” could accelerate the transition to renewable energies in the EU. The huge empire, which is dependent on petrodollars, wants to earn money for its national budget with fossil fuels for a long time to come.

Putin spoke out several times in favor of a return to long-term contracts, because this would give Russia planning security for the development of new deposits. The gas price should therefore be linked to that for oil. Russia is also increasingly producing liquefied gas and can therefore react more quickly to acute situations. "In contrast to the flexible suppliers of liquefied gas, we are firmly bound to Europe through our pipeline system," said Burmistrowa.

The fact that the Nord Stream 2 pipeline, which was built for more than ten billion euros, has not yet been released for operation only triggers uncomprehending shaking of the head in Russia. 55 billion cubic meters of gas per year should flow to Europe in the future. A start date is not in sight.

Meanwhile, the Russians emphasize that in view of the gas crisis they have already delivered more than agreed. Exports to Germany alone increased by 30 percent in the first nine and a half months compared to the same period in the previous year, it said. Germany is the largest Gazprom customer in the EU. The country bought around 46 billion cubic meters of gas from Russia in 2020 - around a third of all consumption in Germany. Still, that's not enough.

However, there is no threat of a collapse in supply. Analysts believe that the storage facilities in Europe are still filled with around 82 billion cubic meters or 76 percent of active gas. That is about 15 percentage points less than the average for the past five years. The Gazprom storage facilities in Germany and Austria, the CEO Alexej Miller admitted during an interview with Putin, had hardly any gas left.

Nord Stream 2: deadline for application for operating licence exceeded

After completion of the pipeline in September 2021 the project stills lacks the required operating licence. This constitutes an obstacle for the startup procedure of the pipeline because the deadline for application at the Federal Network Agency of Germany (Bundesnetzagentur) was march 3rd 2013 as stipulated in the german Energy Industry Act (Energiewirtschaftsgesetz). However the application for Nord Stream 2 arrived on June 24 2021. Lawyers are at strife on how to deal with this issue, writes BILD:

New problems for the Putin pipeline Nord Stream 2!

Completely built, but still without an operating license and without certification, the billion-dollar pipeline lies in the Baltic Sea. In order to change that and soon Russia's gas will flow through the pipe, Nord Stream 2 AG, based in Switzerland, submitted an application to the Federal Network Agency on June 24th for “certification as an independent transmission system operator”.

In its application for certification, Nord Stream 2 AG refers to the German Energy Industry Act (EnWG), which is the only possible legal basis for certification in Germany. But this is exactly where the problem lies.

Because in Article 4b, paragraph 1 of the law: "Transport network operators (...) must submit the application for certification to the regulatory authority by March 3, 2013 at the latest."