NORD STREAM 2 NEEDS RAPID CERTIFICATION

Prices of gas have jumped more than 170 percent since the beginning of the year. There is an urgent need for a rapid certification of Nord Stream 2 to boost gas deliveries.

The timing of the commencement of commercial supplies via the Nord Stream 2 gas pipeline depends on the German regulator (The Federal Network Agency). The German regulator has asked the pipeline operator, Swiss-based Nord Stream 2 AG, for assurances it will not break competition rules and this could take several more months before gas flows. The Germany's Federal Network Agency – which regulates the country's electricity, gas, telecommunications, post and railway sectors – has until early January to come up with a recommendation on whether or not it will certify the pipeline.

While technical requirements have been met, the key sticking point is whether Gazprom will comply with European unbundling rules that require pipeline owners to be different from suppliers of gas flowing in them to ensure fair competition. The Nord Stream 2 operator claims the rules are aimed at torpedoing the pipeline and an advisor to the European Union's top court recommended that Gazprom could challenge the EU rules. The project's identically-sized sister pipeline, Nord Stream 1, has been exempt from unbundling rules since opening in 2011 because it was treated as an interconnector rather than as direct supplier.

Once a three-member independent ruling committee at the network agency has made its recommendation it goes to the European Commission, which has another two months to respond. If both bodies are in agreement that the pipeline fulfills all regulatory requirements then certification can be issued relatively quickly, but if they aren't the process could be further delayed.

Certification can be only given if both have worked out any differences that may arise, which means that it could take until spring 2022 before the pipeline gets certified and can officially start operation.

Gazprom, meanwhile, said it could deliver 5.6 billion cubic meters (bcm), about a tenth of the pipeline's annual capacity in 2021. Nordstream 2 has an annual capacity of 55 billion cubic meters (40% of gas delivered in 2020)

In 2020, Gazprom export delivered 135 billion cubic meters of gas to Europe:

1. Germany: 45.84
2. Italy: 20.80
3. Turkey: 16.40
4. Austria: 13.22
5. France: 12.39
6. Netherlands: 11.81
7. Poland: 9.67
8. Hungary: 8.64
9. Slovakia: 8.62
10. Great Britain: 6.03
11. Czech Republic: 5.01
12. Greece: 3.02
13. Belgium: 2.5
14. Bulgaria: 2.28
15. Denmark: 1.85
16. Croatia: 1.84
17. Finland: 1.61
18. Serbia: 1.35
19. Romania: 0.96
20. Slovenia: 0.41
21. Switzerland: 0.28
22. Bosnia & Herzegovina: 0.21
23. Northern Macedonia: 0.14

The German FederaI Network Agency is not politically independent. For its own recommendation the agency needs a binding assessment on supply security by Germany's Economy and Energy Ministry, of which it is a part. "Certification can only be granted if the Federal Ministry for Economic Affairs and Energy determines that granting certification will not jeopardize the security of gas supply of the Federal Republic of Germany and the European Union,". The Economy Ministry has said it is currently working on this assessment, but has not given a timeline for when it will be completed. Should it determine that operating Nord Stream 2 will put gas supply at risk the agency cannot certify it.

Until a new government is in place, Germany's Economy Ministry is led by Peter Altmaier, a member of Merkel's conservative party, which has backed the pipeline. The threshold for the next government reversing the deal is very high, if the Greens – who have fiercely opposed the project – become part of the next ruling coalition. In addition, Olaf Scholz, who led the Social Democrats to victory in last month's election and stands a good chance to succeed Merkel as chancellor, has been in favor of the pipeline.