* German regulator slaps regulation on pipeline
* Project company reserves right to appeal
* Moscow-Berlin ties already strained by hacking claims
* Parties dispute definition of what constitutes completion
* Building of the remaining kilometres not affected
(Adds Merkel remarks on hacking)
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 far behind schedule and
has faced political opposition from Washington, as well as from
Ukraine and Poland through whose territory Russian gas is
shipped to consumers in western Europe.
Germany's pipelines regulator, the Bundesnetzagentur, said
the project was not exempt from EU unbundling rules that require
separate operators for the production, transport and
distribution of energy for the section that runs through German
territory.
A German Economy Ministry spokesman declined to comment on
the authority's decision.
Germany's relations with Moscow are already under strain
after Chancellor Angela Merkel this week told legislators "hard
evidence" had been found that Russian agents were behind a 2015
hacking attack on parliament.
Merkel said the attack, in which legislators' e-mail
accounts, including hers, were plundered, was part of a pattern
of Russian attacks designed to disorientate adversaries. Russia
denied any involvement.
The regulator said the Nord Stream 2 consortium - which also
includes Uniper, Wintershall-Dea, Royal
Dutch Shell, OMV and Engie - did
not qualify for an exemption because the pipeline had not been
completed by May 23, 2019.
The dispute over regulation does not affect the ongoing
construction of the pipeline, but may add to operating
challenges.
Nord Stream 2 is expected to open around early 2021 after
numerous delays.
A Russian pipe-laying 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, said that although not physically
complete, the project had been economically functional, with
billions of euros of investments made in good faith.
It said it has a month to evaluate the decision and to
consider further action and that the definition of completed can
be contested as clashing with fundamental rights in EU law.
Before the latest German ruling, it had asked the European
Court of Justice to nullify the EU regulation that could prevent
it operating and called for arbitration under the international
energy charter that 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
last four years, while its own supplies declined.
This volume is roughly equivalent to NS 2 and its forerunner
Nord Stream 1, which opened in 2011, combined.
Friday's ruling could drive up costs for the consortium and
cause it more delays as it implies it may have to set up a
transport operating company and seek bids from third parties to
participate in gas auctions.
(Reporting by Vera Eckert, Vladimir Soldatkin, Tom Kaeckenhoff
and Thomas Seythal
Editing by Riham Alkousaa, Jan Harvey, Frances Kerry and Barbara
Lewis)
