European gas futures futures rose 10% on Monday after German Foreign Minister Annalena Baerbock said the Nord Stream 2 pipeline cannot be allowed in its current form because it does not comply with EU law.
Speaking on the ZDF TV channel late on Sunday, Baerbock said the three parties that make up Germany’s new government – the Social Democrats, the Greens and the liberals – had agreed that all Energy projects, including Nord Stream 2, must comply with EU energy law.
“And that means, as things are going at the moment, this pipeline cannot be approved because it does not meet the requirements of European energy law,” she said.
The above situation Ukraine border, where Russia has about 100,000 troops, “also a factor,” says Baerbock. “The government has finally discussed with the Americans that if there is further escalation, this pipeline will not be operational,” she added.
Pipeline top of the list as US officials consider potential sanctions Western countries could threaten against Russia.
Baerbock’s comments suggest that Germany’s stance on Nord Stream 2 could become more difficult now that the Greens, who have long opposed the project, are in charge of the foreign ministry. However, the Social Democrats, the party of prime minister Olaf Scholz, traditionally support this line.
Nord Stream 2, completed but not yet authorized to begin operations, will double the capacity of sea routes from Russia to Europe. Critics of the project in the US and Europe argue that it will increase the EU’s reliance on Russian energy exports and allow the Kremlin to put pressure on Ukraine, which will be denied shipping fees. lucrative gas if pipelines are underway.
European natural gas futures prices rose to their highest levels since early October. The European gas standard for delivery in December jumped as much as 10% on Monday morning to a high of 115.70 € per megawatt hour, up from 105.35€ on Friday and just lower record high 117.50 €/MWh in October.
Cold weather and steady but weak flows from Russia to Western Europe have led to a rapid decline in gas stocks. Across Europe, gas storage facilities are currently only 62.8% full, 10% below seasonal standards. If withdrawals continue at current levels, storage levels will reach extremely low levels in March/April next year. Analysts say there is no clear recovery to Europe’s gas markets beyond a mild winter.
Nord Stream 2 can only go into operation after being approved by the German regulator, the Bundesnetzagentur or the Federal Network Agency and the European Commission.
But in mid-November, the Bundesnetzagentur suspend the certification process, citing non-compliance with the EU gas directive. This has strict “separation” rules, which stipulate that companies producing, transporting and distributing gas within the EU must be separate entities.
The Bundesnetzagentur said it can only approve the pipeline if the operator is “organized under German law”. Nord Stream 2 will seek to comply with the requirement by establishing a German-based subsidiary that will own and operate part of the pipeline running through German territory.
Asked on Monday morning why NS2 in its current form is not compliant with EU law, Baerbock pointed to the Bundesnetzagentur’s decision to suspend the certification process, “because there are clear requirements under EU energy law.” about group separation”.
Nord Stream 2 AG, the pipeline operator, and Gazprom, the company that supplies the gas that will flow through it, both declined to comment.
Kremlin spokesman Dmitry Peskov, when asked to respond to Baerbock’s comments, said the pipeline company “is working with the regulator and responding to all their requests. We just need a little more patience.”
“This is technical, bureaucratic and legal work. So it’s still ongoing, let’s not get ahead of ourselves,” he said, according to Interfax.
Additional reporting by Nastassia Astrasheuskaya in Moscow and Neil Hume in London
