By Associated Press - Tuesday, November 16, 2021

BERLIN (AP) — Germany‘s network regulator said Tuesday that it has suspended its procedure to certify the operator of a new pipeline that would bring Russian gas to the country under the Baltic Sea because of an issue with the company’s status under German law.

Construction of the Nord Stream 2 pipeline was completed earlier this year, but it is not yet in operation — and Tuesday’s development reinforced expectations that it won’t be for a while longer. Ukraine and the United States have opposed the project, and it is being closely watched because of tight supplies of natural gas in Europe.

Last month, Russian President Vladimir Putin said the country could quickly boost natural gas supplies to the European Union once German regulators allow the new pipeline to start operation. Energy prices have soared in Europe, which imports much of its natural gas from Russia, and led to pain for businesses and households.

It wasn’t immediately clear to what extent the move by the German network regulator, the Bundesnetzagentur, to suspend the procedure to certify Nord Stream 2 AG as an independent transmission operator might hold up the start of operations. The step is required before gas can legally flow.

“Following a thorough examination of the documentation, the Bundesnetzagentur concluded that it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organized in a legal form under German law,” the regulator said in a statement.

The operating company is based in Zug, Switzerland, and “has decided not to transform its existing legal form but instead to found a subsidiary under German law solely to govern the German part of the pipeline,” it added. That will become the owner and operator of the German section of the pipeline.

The agency said the certification will remain suspended “until the main assets and human resources have been transferred to the subsidiary” and it can verify the documentation is complete.

Nord Stream 2 AG said it couldn’t comment on details of the procedure, its possible length and any effects on the pipeline’s operational start, German news agency dpa reported.

The certification issue is “another reason to expect that the pipeline will not be starting commercial operations until about mid-2022,” Carlos Torres Diaz, head of gas and power markets at energy research firm Rystad Energy, said.

Given the time needed to resubmit the documentation, the pipeline would not be delivering commercial volumes of gas to Germany “before the end of the winter,” he said.

Owned by Russian-controlled gas giant Gazprom with investment from several European companies, Nord Stream 2 was built under the Baltic Sea and bypasses Poland and Ukraine, raising objections from those countries.

The U.S. has strongly opposed the construction of Nord Stream 2 but reached a deal with Germany in July to allow the pipeline’s completion without imposing sanctions on German entities.

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