You can discuss Nord Stream 2. Some welcome this pipeline from Russia across the Baltic Sea to Mecklenburg-Western Pomerania, as it will make the supply of natural gas cheaper and safer. Others criticize Nord Stream 2 because Germany does not need even more climate-damaging infrastructure; in addition we become too dependent on Russia.
But when the Russian-European consortium soon completes the pipeline, there will be another controversial question that the Düsseldorf Higher Regional Court has now addressed: Should the pipeline comply with state regulations, which still requires some precautions? Or will Nord Stream 2 be allowed to operate freely and under private law?
The court concludes that the management is subject to European gas market regulations. The regulations stipulate, for example, that the production of natural gas, its transport and its distribution must be separated from each other. This is not trivial because the Russian group Gazprom is both a major gas producer and a major financier of Nord Stream 2. In addition, a regulated operator must also give access to its network to other companies. And an authority like the network agency is authorized to regulate transport costs.
These are rules which also apply in principle to other so-called natural monopolies. For example, Deutsche Telekom has to give competitors such as 1 & 1 access to fixed connections, of course for a fee. Swiss Post also transports letters by land that its competitors have previously collected at regional level. And Deutsche Bahn must give competitors like Flixtrain access to their rails. The state wants to allow competition and avoid exorbitant prices, even if a network – for historical reasons, for example – belongs to a monopoly. The Federal Network Agency, based in Bonn, is responsible for precisely these markets.
Nord Stream 2 claims construction began a long time ago at the crucial deadline
The origin of the regulatory dispute over Nord Stream 2 is a directive presented by the European Commission in 2017 and implemented by Germany in 2019. It stipulates that gas pipelines from outside Europe should also be submitted uniform regulation in the EU. “This concerns the Nord Stream 2,” said Hearing President Anne Frister. After all, the pipeline from Russia runs 54 kilometers through the territory of the EU.
However, the law provides an exception for lines from third countries already completed in May 2019. At that time, the two strands of Nord Stream 2 had already been laid over a few hundred kilometers, the court ruled that the consortium had then spent around six billion euros. Nord Stream 2 therefore requested exemption from regulation of the gas pipeline: the investment decision had long been irreversible upon expiry.
But the network agency rejected the request because the line had not been completed “in a structural-technical sense”, so the OLG summed up the argument. For example, the pipes had not yet been welded and a factory on land was not yet ready. “This is a problem of interpretation,” said Justice Frister. Your Senate has now rejected Nord Stream 2’s complaint. The reason was not yet known on Wednesday morning. The project company can of course appeal the decision to the Federal Court of Justice.
Federal Network Agency responds that you can also earn money with regulated lines
Whatever the outcome, the court and the network agency pointed out that a gas pipeline can also be operated profitably with regulated user charges. “We are not talking about the fact that construction should be stopped,” the agency’s legal representative said at the hearing in June.
Nord Stream 2 travels a good 1200 kilometers from Vyborg to Lubmin near Greifswald. Russian Gazprom has invested around nine billion euros in the line with five European energy companies. This should be operational this year. Nord Stream 2 must now be certified as an independent network operator in the EU. To do this, Gazprom must prove that the transport takes place independently of its own gas production. The project company had already submitted a corresponding request in June as a precautionary measure.
With Nord Stream 2, Russia will now be able to deliver twice as much gas via the Baltic Sea to Europe as before. The additional sea route is shorter and more modern than the existing land gas transit, says Moscow for the line. Internationally, Ukraine in particular fears that with Nord Stream 2 it will in future transport less gas by land route and thus lose income. In concession, Germany for example announced that renewable energies would be financially promoted in Ukraine. Meanwhile, environmental organizations criticize that large-scale fossil fuel projects like Nord Stream 2 are no longer in keeping with their times. Because when natural gas is burned – whether in heating systems, power plants or industrial plants – greenhouse gases are produced.