Tuesday, February 7, 2023

Germany to Suspend Nord Stream Pipeline, Spiking Gas Prices Even Higher

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(TheConservativeNews.org) – Despite some European countries and the United States disagreeing with Russia’s Nord Stream 2 pipeline connecting Russia to Germany, the project finally got the okay to proceed. Now, Germany is throwing a wrench in the works as it suspends the pipeline, driving already high gas prices even higher. 

Germany’s Suspension

The German regulator, Bundesnetzagentur, stated that because the pipeline’s operating company was Switzerland-based, it couldn’t certify the firm as an independent operator. According to German law, the regulator said that it could only approve an operator for Nord Stream 2 if the company created one legally by going through the appropriate channels. 

Germany’s decision comes at a time when tensions are high between Russia and the European Union (EU). The Swiss operator mentioned that it has no intention of transforming its current legal form. Instead, the operator indicated that it would establish a new subsidiary per German law to govern its part of the pipeline. Bundesnetzagentur insisted that once the company has met all preconditions, it would continue to assess submission in what remained of the four-month application period. 

Sky-High Prices

The EU has already dealt with high gas prices, but Germany’s suspension of Nord Stream 2 caused future rates to rocket 10%, throttling businesses and residents. Analysts indicated that with Germany’s suspension, the pipeline won’t be able to begin commercial operation until mid-2022 at the earliest.

CEO of Trafigura, Jeremy Weir, warned that there wasn’t enough gas as it was, and that Europe wasn’t storing gas for the winter. Experts are concerned about what coming months hold, claiming that a colder than average winter could result in rolling blackouts.

Opposition From Ukraine

Ukraine has been staunchly against the formation of Nord Stream 2 since the beginning as it bypasses the country altogether, resulting in it losing gas transportation revenue. Yuriy Vitrenko, the head of Ukraine energy company Naftogaz, called Germany’s decision a good one. Vitrenko added that he believes Germany shares mutual thoughts with Ukraine, insisting the certification be done for the entire pipeline and not just a portion of Germany. 

Russia currently has a pipeline under the Baltic Sea, Nord Stream 1, which the second will replace. At this time, the predecessor pipeline can transport over half of Germany’s annual usage at 55 billion cubic meters. Nord Stream 2 looks to double that flow, making Germany the central gas arrival station in Europe. The head of gas and power markets at Rystad Energy, Carlos Torres Diaz, noted that the pipeline’s certification could face even more challenges in EU’s review stage, further delaying its commercial operation. 

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