162 - February 2022 - Germany suspends Nord Stream 2: Q&A on what happens next

25 February 2022 - Germany suspends Nord Stream 2: Q&A on what happens next

 Those questions are: is Nord Stream 2 dead? Will Germany’s gas strategy change? How will it change the current official assessment of Germany and the EU’s security of supply? Can Nord Stream 2 AG sue Germany? Will Germany build its first LNG import terminal? What are the reactions from German and European Stakeholders?

1. What’s the significance of the decision to suspend the approval process? Is Nord Stream 2 dead?

...he decision does not necessarily mark the end of Nord Stream 2, which was completed in September 2021. For now, the government made use of a regulatory tool to halt the certification...

2. Does the German government reassess its position on natural gas with the decision?

... “Germany is and will remain an importing country for energy, even if the energy sources will be CO2-neutral in the long term,”...

3. What does the decision mean for supply security in Germany and Europe?

... Germany and many other European countries rely on Russian supplies to cover a high share of their energy needs. About half of Germany’s, and more than 40 percent of the EU’s, natural gas imports currently come from Russia and the country is also the main external supplier of coal and oil products to Europe. However, as Nord Stream 2 has not yet begun operation, stopping the pipeline’s completion alone would not mean any changes to current supply capacities...  the risk increases if the conflict and accompanying sanctions drag on until next winter. A straightforward response would be to reduce the amount of gas needed, rather than looking for new suppliers, the think tank concluded: “Whatever happens, the most efficient solution requires demand-side adjustments to reduce dependency on gas.”...

4. Can stopping Nord Stream 2 have legal repercussions for the German government?

If German authorities put a final stop to the use of the completed pipeline, the Nord Stream 2 company will likely resort to legal action. The German government could be faced with a compensation claim brought forward by the Nord Stream 2 AG operator...

...Before the court, the legitimate expectations of the plaintiff, for example positive signals given to Nord Stream 2 by receiving construction permits for the pipeline, are important arguments; while a changing political situation, even if caused by a crisis like the one in Ukraine, does not count as a valid argument, legal expert Gabriel Lentner told Tagesspiegel Background...

The ministry stressed that the supply security assessment (completed by the previous government in its very last weeks in office) is “based on an analysis of factual and legal fundamentals and can or must be adjusted in the event of a change in significant factual fundamentals” (Section 4b (3) EnWG). Both Russia’s aggression in Ukraine and patchy gas deliveries from Russia this winter are counting as such a change in “factual fundamentals”, minister Habeck indicated. How vulnerable the report will be to future legal action depends a lot on its actual wording and reasoning on how Nord Stream 2 endangers Germany’s supply security, legal experts told Die Welt. After the German government’s assessment, the European Commission also gets a say.

NOTE: [MRT: Read the full report]