Unbundling Rule Another Hurdle for Nord Stream II

The Nord Stream II (NSII) natural gas pipeline will be completed, despite political opposition from Ukraine, Poland and the US – but a court challenge to how it operates may be another sticking point for the USD 11bn natural gas pipeline, which will deliver 55bcm of natural gas to Germany.

That challenge to the pipeline comes from a regional German court. This week the Higher Regional Court in Dusseldorf is set to decide whether the project’s energy production is separate from the transport and trade of the Russia-sourced natural gas. If NSII is ruled not to be in accordance with this “unbundling” regulation which requires that those activities be performed by separate companies, the gas pipeline’s consortium might have to hold third-party auctions of the gas. In 2011, the Nord Stream I project was allowed an exemption to the rules as it was classified as an interconnector.

Gas from NS2 is expected to flow later this year.

Meanwhile, on her final visit to Ukraine before she leaves office, German chancellor Angela Merkel has tried to assuage the fears of Ukraine’s president, Volodymyr Zelensky, about his concerns that NSII – circumnavigating gas pipeline infrastructure in Ukraine, which will lose billions in transit fees – is “dangerous for all of Europe.” If Moscow used gas as a political weapon, chancellor Merkel said Germany and the US might impose sanctions against Russia.

Sources: Euractiv, BBC