Final construction permit issued for Nord Stream 2 pipeline

The Danish Energy Agency last week granted a construction permit for Gazprom’s Nord Stream 2 gas pipeline. If the permit goes uncontested, Gazprom can begin laying pipe next month in the waters of Denmark’s exclusive economic zone. About 150 kilometres of the 1,230-km pipeline runs through the Danish exclusive economic zone. The pipeline has already been laid in the Russian, Finnish and Swedish zones, and work continues in the southern Baltic Sea. Under the original schedule, the pipeline was to have been completed by the end of 2019. The capacity of Nord Stream 2 of 55 billion cubic meters a year is identical to the capacity of its twin, the Nord Stream 1 pipeline, which was commissioned in 2012.

Great uncertainty still surrounds commissioning of the pipeline. Under the EU’s internal gas market rules, individual gas suppliers are limited to using no more than 50 % of the capacity of trunk pipelines. The Nord Stream pipelines come ashore in Greifswald, Germany, from where gas is transmitted southward via the OPAL trunk pipeline. A 2016 decree gave Gazprom the right to use the full capacity of the OPAL pipeline if no other suppliers needed to use it. At the beginning of September, and EU court ruled that Gazprom’s exemption on trunk pipeline use was invalid. If the ruling goes uncontested, Gazprom has to supply about 12 billion cubic metres of natural gas to its customers by alternative means. According to Poland, which had sought the ruling, Gazprom will have to import that gas into the EU via Ukraine. Ukraine, the EU and Russia last held talks on gas transiting Ukraine at the end of October, but adjourned without reaching an agreement. The current transit agreement expires at the end of December.

In April 2019, the Council of the EU approved changes in the EU gas market directive. At the start of next year, the EU internal gas market rules shall apply to gas transmission lines between a member state and a third country, up to the member state’s territorial borders. It is still unclear how the rules will be interpreted with regard to the Nord Stream 2 pipeline.