Zoya Burbeza discusses the implications of an EU gas directive amendment and requests from Denmark for Nord Stream 2 in World Pipelines

February 09 2020

A route beset by challenges

Zoya Burbeza

This article was originally published in World Pipelines' February 2020 Issue and the full article can be accessed here, on page 17.

It is anticipated that over the next three years Europe will have total planned pipelines of more than 10 000 km in length, including crude oil pipelines, petroleum product pipelines and natural gas pipelines. In the latter category, Russia dominates. In October 2018, the Russian President Vladimir Putin estimated that his country’s total 2018 natural gas deliveries to Europe would be 200 billion m3 – an increase of almost 3% over 2017’s record volume. Putin also noted that European countries choose to consume Russian gas because it is considered cheaper.

Although Russia is not an EU member state, the nature of pipelines being constructed across EU borders means that EU law invariably comes into effect in relation to pipelines such as Nord Stream 2. The new 1225 km pipeline, which will run under the Baltic Sea from Vybord in Russia (north west of St Petersburg) to Greifswald in north eastern Germany, began construction in 2010 and is soon to be completed. 

The pipeline is owned by the predominantly Russian state-owned Gazprom, which will also be its operator. This is despite the fact that 50% of the funding derives from assorted European energy companies, including Germany's Uniper and BASF, Anglo-Dutch Shell, Austria's OMV, and France's Engie.

However, in a major development, the Russian-led project has taken the EU to court in order to challenge new rules which it says are intended to stall the pipeline's operation. It has asked the European Court of Justice (ECJ) to annul an EU gas directive, which dictates the pipes cannot be directly owned by a gas supplier. 

So what impact does the directive have? In essence, EU directives are legal acts which leave member states with a certain amount of latitude as to the exact rules to be adopted. In effect, they require each member state to achieve a particular result without dictating exactly how it should be achieved. 

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