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Germany seeks competition assurances over Nord Stream 2 gas pipeline

Germany’s energy regulator said the Nord Stream 2 pipeline must show it would not break competition rules by limiting which suppliers used it and could face a fine if it started pumping Russian gas to Germany without securing necessary approvals.

Nord Stream 2, a project led by Gazprom GAZP.MM, which has a monopoly on Russian pipeline gas exports, will pump the fuel via a pipeline under the Baltic, bypassing Ukraine, which is embroiled in a long-running territorial dispute with Moscow.

Construction is completed and tests are underway, but the project has faced opposition from the United States and some European nations, which say it will make Europe too reliant on Russian gas, which accounts for about a third of European needs.

Opponents also say Russia has applied pressure to try to speed up the German approval process by not supplying extra gas to Europe at a time when the region is facing an energy crunch amid surging global gas demand and rocketing prices.

The Kremlin says it is meeting its obligations.

German regulator Bundesnetzagentur (BNetzA) said late on Monday it had asked the pipeline operator, Switzerland-based Nord Stream 2 AG, to show it was meeting all necessary regulatory requirements before the pipeline entered service.

“This relates in particular to issues of non-discriminatory network access and the integration of the interconnector into the German market area,” it said, a reference to rules that include ensuring the operator did not restrict access for other gas suppliers.

BNetzA, which said in September it had four months to complete certification, said it could not rule out that Nord Stream 2 operations could start soon. But it warned the operator that it could face a fine if it started up before necessary certification was secured.

Nord Stream 2 said on Monday it had started tests on the pipeline, which has capacity to pump 55 billion cubic metres (bcm) of gas a year. It runs parallel to an existing Nord Stream pipeline, doubling capacity of the network.

Germany’s Economy Ministry also has to carry out an assessment before the regulator can send its recommendation to the European Commission. The European Union executive then has two months to respond once is receives a submission.

The pipeline operator said: “Nord Stream 2 will continue to undertake all necessary efforts to ensure compliance with all applicable rules and regulations.”

It also said it had appealed against an August German court decision that ruled the pipeline was not exempt from EU rules requiring pipeline owners to be different from suppliers of the gas flowing through them.

Nord Stream 2 says these EU rules, which were amended in 2019, were aimed at torpedoing the project.

Analysts say Nord Stream 2 was unlikely to significantly ease sky-high gas prices which threaten hefty bills for European consumers this winter.

European benchmark Dutch wholesale gas for November were trading around 110 euros ($128) per megawatt hour (MWh) on Tuesday, up almost 500% since the start of the year.

Source: Reuters (Reporting by Tom Kaeckenhoff and Christoph Steitz; Additional reporting by Nina Chestney in London, Markus Wacket in Berlin and Oksana Kobzeva in Moscow; Editing by Sonya Hepinstall and Edmund Blair)

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