Nord Stream 2 gas flows may be delayed into 2022

LONDON (ICIS)–The start of flows via Russia’s Nord Stream 2 pipeline is facing further delays as the certification process and further EU approval may take up to eight months.

On Monday, the European benchmark ICIS TTF front-month rose by €2.33/MWh to just over €60/MWh, ICIS assessment at 11am London time showed.

But it is difficult to determine whether the news is the sole factor behind this jump. Multiyear-low European stocks, low LNG supplies to the continent and overall high volatility are other bullish factors that have already been supporting prices in European markets in the past few weeks and keep doing so.

The Russia-Germany offshore pipeline needs to be certified compliant with EU rules such as unbundling. German regulator BNetzA has until 8 January 2022 to make a draft decision and submit it to the European Commission.

The commission has two months to examine BNetzA’s draft decision, but this can be extended by another two months. The commission has not been supportive of Nord Stream 2 and so is likely to examine the decision with particular caution and scrutiny.

Operating a gas pipeline without certification by BNetzA may be sanctioned by a non-compliance procedure, BNetzA told ICIS.

BNetzA’s decision also requires Germany’s federal energy ministry’s approval. The ministry has three months upon receiving all required documents to assess whether granting the certification would jeopardise Germany and the EU’s security of energy supply.

Nord Stream 2 must comply with EU rules such as unbundling, third party access and tariff transparency.

Unbundling is when the owner of the pipeline is separated from the owner of the gas that flows in it. This may make the certification process trickier as Nord Stream 2 is fully owned by the only company that is legally allowed to flow gas through it.

Russia’s state-controlled producer and Nord Stream 2 owner Gazprom has a monopoly on Russian export pipelines.

In August, Gazprom said Nord Stream 2 may carry 5.6 billion cubic metres this year . This is roughly 10% of the pipeline’s capacity.