* German regulator slaps regulation on pipeline
* Project company reserves right to appeal
* Parties dispute definition of what constitutes completion
* Building of the remaining kilometres not affected
(Adds comment from analyst, government reaction, construction
aspect)
By Vera Eckert
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.
A German Economy Ministry spokesman declined to comment on
the authority’s decision, adding that its relevant
decision-making chamber was independent.
The dispute over regulation does not affect the ongoing
construction of the pipeline, but its operation once it is
running.
Nord Stream 2 expects to open in late 2020 or early 2021.
A Russian pipelaying vessel, Academic Cherskiy, is ready to
travel from near Kaliningrad to Bornholm and complete the
remaining 160 km (100 miles) after its predecessor Allseas had
to abandon work because of a threat of U.S.
sanctions.
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.
It stated it has one month to evaluate the decision and to
consider further action. It considers that the definition of
"completed" can be contested as clashing with fundamental rights
in EU law. Before the latest German ruling, it had already asked
the European Court of Justice to nullify the EU gas directive
amendment last year calling for regulations on all
infrastructure not completed by May 23 this year.
It has also called for arbitration under the international
energy charter which protects investments.
Gas market analyst Wolfgang Peters of the GasValueChain
company said Europe needed additional gas at competitive prices,
as its demand jumped by nearly 100 billion cubic metres over the
past four years, while its own supplies are dwindling.
This volume is equivalent to NS 2 and its twin forerunner,
the Nord Stream 1 pipeline that opened in 2011.
Friday's 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.
(Reporting by Vera Eckert, Vladimir Soldatkin, Tom Kaeckenhoff
and Thomas Seythal
Editing by Riham Alkousaa, Jan Harvey and Frances Kerry)
