Germany’s decision not to approve Nord Stream 2 has raised concerns about the future of the 1,230-km, $11 billion gas pipeline under the Baltic Sea. Gazprom may also be suing for compensation.
Here’s what you can expect next with Europe’s most divisive project in energy:
ISN’T NORD STREAM 2 OVER?
It is possible, but not necessarily, that the pipeline, which was completed last year but had been awaiting certification, will ever come online.
When asked by ARD if Nord Stream 2 could still go online, Olaf Scholz, German Chancellor, said that “We are in a position at the moment where nobody should bet on it.” We are far from this right now.
Robert Habeck, Economy Minister of the Greens, said in a separate interview that it could be scrapped completely.
He stated that it was still possible for sanctions to be imposed against Nord Stream 2.
The Kremlin and some companies that support the pipeline believe they can reverse the decision to halt certification.
WHAT’S NEXT IN THE CERTIFICATION PROCESS PROCESS?
Tuesday’s withdrawal by the German economy ministry of an assessment submitted last January to the German energy regulator declared that the pipeline did not pose a risk to energy supply security.
The ministry is expected submit a revised assessment within three months. This would include Russia’s recognition and threat of military invasion by Russia.
If the regulator declares the pipeline a threat to energy security as expected, Germany’s energy regulator will almost certainly not approve it.
After Scholz had suspended the project, the regulator stated Tuesday that it couldn’t certify Nord Stream 2 and therefore its operation would be illegal.
WILL THE COMPANIES BEHIND PIPELINE SUE
The suspension of certification has raised concerns about possible lawsuits by Nord Stream 2 AG (the subsidiary based in Switzerland that Gazprom set up to operate the pipeline) and its partners seeking compensation from Germany.
Habeck stated that Germany is protected from such claims due to the fact that certification is a contractual pre-requisite to the operation of the pipeline.
This issue is a contentious one.
Wiegand Laubenstein is a former judge who is now a partner at Rosin Buedenbender’s energy law firm Rosin Buedenbender. He stated that the government would be protected from financial liability if the Economy Ministry presents a negative assessment on Nord Stream 2.
Laubenstein sent an email stating that “the process chosen by government is totally justified, formal sound, and shuts out potential claims for damages,” adding that the assessment would almost certainly prove negative.
Gabriel Lentner, a legal scholar from the Danube University Krems, Austria, stated that the lawsuits were unlikely until the government presented a new assessment.
Lentner stated that “one big question is how Germany will justify its suspension of this project and whether its justifications for doing so are warranted under the contracts with Nord Stream 2 AG.”
He said: “I think Nord Stream 2 will probably wait for the Economy Ministry to make a new assessment before deciding whether to file a lawsuit seeking compensation. It is a temporary suspension in the interim until the project is certified. It is very costly to start any legal process.
What legal options are available to NORD STREAM 2 members?
Nord Stream 2 could seek damages from the government in a German court. It could also seek international arbitration under ECT (Energy Charter Treaty), which allows companies to sue other countries for policies that affect their investments.
The ECT was originally created to protect energy companies as the Soviet Union collapsed. However, new analysis suggests that it could allow coal plants to be built in 54 s.
