On Wednesday, a German court in Düsseldorf ordered Russia to split the Nord Stream 2 gas pipeline ownership with an independent third party to avoid energy monopolies.
The Düsseldorf Higher Regional Court stated that the Nord Stream 2 gas pipeline would not be exempted from European Union (EU) rules that “require the owners of pipelines to be different from the suppliers of the gas that flows in them to ensure fair competition.” The Court ruled: “Gazprom, as an effective owner of Nord Stream 2 that is technically headquartered in Switzerland would have to cede day-to-day control of the pipeline’s operations to an independent third party. It is in accord with a recent EU legislation which came into force in 2019 designed to limit the creation of energy monopolies.”
The pipeline must be certified as an “independent transmission or system operator” under EU regulations to comply with the Court ruling. As per the ruling, Gazprom doesn’t have to sell ownership rights in the unit but must give up operations rights, ensuring the gas pipeline’s independence from the Russian gas giant. The Court also ordered Gazprom to auction at least half of Nord Stream 2’s capacity to be used by competing energy companies.
The ruling comes after the operators of the Gazprom-backed project filed a plea last year arguing that the EU rules were discriminatory. The operators claimed that the rules amended in 2019 aimed at delaying the pipeline since the project is opposed by several European governments, including Ukraine, which see the pipeline as a geopolitical weapon.
The Nord Stream 2 operators stated that “the German court’s decision highlighted the discriminatory effect of the European Union’s amended Gas Directive,” which will cost the pipeline extra time and money but will not stop its completion. As per the EU gas directive, “exemptions can only be granted to pipelines completed by May 23, 2019.”
The German Court decided against granting an exemption to the gas pipeline after the operating consortium, which includes five western utilities and oil companies, sought a review of the decision in May 2020 by the German energy regulator, known as the Bundesnetzagentur.
It has been reported that Gazprom might appeal against the ruling in Germany’s Supreme Court.
Reacting to the Court order, Kremlin spokesperson Dmitry Peskov said, “We can only reiterate that the Nord Stream 2 is a purely commercial project aimed at significantly strengthening European energy security.”
Nord Stream 2 is an $11 billion gas pipeline built under the Baltic sea to carry gas from Russia to Germany with a 55 billion cubic metres transport capacity. The gas pipeline has faced opposition from the United States (US), Ukraine, and Poland. The US fears Europe’s increased dependence on Russian gas. However, a meeting between German Chancellor Angela Merkel and US President Joe Biden in July resulted in an agreement between Berlin and Washington over Nord Stream 2. Ukraine continues to oppose the pipeline, citing a loss of transit fees and security threats.