* German regulator slaps regulation on pipeline
* Project company reserves right to appeal
* Parties dispute definition of what constitutes completion
(Recasts to include consortium considers appeal, adds detail on
possible consequences, context)
FRANKFURT, May 15 (Reuters) - Germany's energy regulator on
Friday declined to grant a waiver of European Union gas
directives to the operators of the Nord Stream 2 pipeline,
dealing a fresh blow to the project to carry gas from Russia to
Germany under the Baltic Sea.
Nord Stream 2, designed by Russia's Gazprom to
increase direct shipments to Europe, is already long behind
schedule and has faced political opposition from Washington as
well as from Ukraine and Poland, through whose territory Russian
gas is currently shipped to consumers in western Europe.
Germany's Bundesnetzagentur regulator said on Friday that
the project is not exempt from so-called unbundling rules, which
imply production, transport and distribution of energy must be
independently organised, on the section that runs through German
territory.
It said the Nord Stream 2 consortium - which also includes
Uniper, Wintershall-Dea, Shell,
OMV and Engie - did not qualify for an
exemption because the pipeline had not technically been
completed by May 23, 2019.
The consortium, whose five Western partners put up 50% of
the finance for the pipeline, argued that while not physically
complete the project had been economically functional, with
billions of euros of investments made in good faith.
In a statement on Friday after the German regulator's
publication, the consortium said it had one month to evaluate
the decision and to consider further action, including an
appeal.
"International legal experts have confirmed that narrowing
the definition of 'completed' to the conclusion of the physical
construction of a gas pipeline would violate the protection of
legitimate expectations and other fundamental rights in EU law,"
it said.
It said it also considered the ruling in breach of German
constitutional guarantees.
The ruling implies higher costs and time delays to the
consortium, as it suggests it may have to set up a transport
operating company and seek bids by third parties to participate
in gas auctions.
Fees charged on the network would be monitored by the
Bundesnetzagentur.
(Reporting by Vera Eckert and Vladimir Soldatkin; Editing by
Riham Alkousaa and Jan Harvey)
