Nord Stream 2 mulls legal options

The project developer of Russian state-controlled Gazprom's 55bn m³/yr Nord Stream 2 pipeline is evaluating its options over appealing against recent rejections of claims made to avoid the application of EU law to the project.

The EU's general court yesterday rejected as inadmissible an action brought by Nord Stream 2 seeking to annul the amended EU gas directive passed on 23 May last year.

The court said that because the directive was only given effect by German legislation, Nord Stream 2 was not "directly concerned" by the directive, but a challenge to the directive could be made through the German legal system. Nord Stream 2 today cited this position and noted that its claim had not been rejected on substance.

The project developer said that the threshold for admission of a direct action at the general court for annulment is "very high". It maintains its position that the project has been "unlawfully targeted and discriminated by" the amendment to the EU directive.

German regulator Bnetza last week rejected Nord Stream 2's application for derogation from certain aspects of the transposed law, made on the claim that the pipeline was "complete" prior to passage of the amendment at EU level. Nord Stream 2 cited a commissioned legal opinion, which said the project could be considered "complete" on the basis all investment decisions needed to execute the project were taken by 23 May 2019, leaving only construction and related engineering processes unfinished.

But Nord Stream 2 today told Argus that Bnetza's decision made the "discriminatory effect" of the amended EU directive "very obvious".

The court said Nord Stream 2 could challenge any decision made by Bnetza regarding a derogation or exemption request and incorporate any challenge to the directive itself in that appeal. The German court hearing the appeal would then be required to put questions to the European Court of Justice (ECJ), seeking a preliminary ruling regarding the validity of the amendment, the court said.

Nord Stream 2 said it is evaluating both the court's and Bnetza's rulings, and possible next steps in relation to each, noting each route was not "mutually exclusive". It said both routes aim at a review of the case's merits, which is "essentially about a breach of the principle of non-discrimination".

It has until 15 June to file an appeal against Bnetza's decision and 30 August to file an appeal against the court's decision. The latter may only be made on points of law, rather than on the underlying claims. Bnetza's decision may be appealed on its merits.

Nord Stream 2 confirmed that both decisions have had no impact on final construction works, but did not provide any details about their progress. The pipeline is mostly completed, but Swiss pipelaying firm Allseas suspended work on the Danish section of the line on 20 December after the US imposed sanctions on firms providing pipelaying vessels for the project. Gazprom had said earlier that it will finish Nord Stream 2 on its own.

If Nord Stream 2 is unable to overturn Bnetza's decision or the amended gas directive, it would need to provide access to third parties and turn over to an independent operator the management of the short section of pipeline governed by German law, in order to use the line's capacity under the terms of the transposed law.

But granting third-party access could be difficult given the absence of entry points outside of Russia and Gazprom's monopoly of pipeline gas export rights under Russian legislation. The pipeline would also become liable to German tariff regulation.

By Paul Martin