When the joint pipeline project by Russia’s Gazprom and European energy giants was launched in 2015, EU legislation did not suggest it would fall under European anti-monopoly laws in the energy sector. This changed in 2019, when the bloc amended its legislation in a way that would affect Nord Stream 2.

Nord Stream 2 AG has stated that it received a ruling by the German high court in Dusseldorf, saying the pipeline can’t be exempted from the provisions of the amended Third Energy Package as its operator demanded. Nord Stream 2 AG said it will evaluate the ruling and will announce further action in “a timely manner”.

While the pipeline’s operator did not clarify what action that might be, Nord Stream 2 AG said that it disagrees with the court’s verdict. The company explained that from the perspective of the laws implemented in 2019, the pipeline had been “completed” before the latest amendments to the Third Energy Package came into effect.

“The rejection of the Nord Stream 2 bid for exemption showcases the discriminatory effect of the amended EU Gas Directive. Being guided by the legal framework that was in force at that time, the company made an investment of several billion euros long before the European Commission announced plans to amend the EU Gas Directive”, Nord Stream 2 AG said.

The high court in Dusseldorf later stated that Nord Stream 2 AG can appeal today’s ruling on the pipeline not being exempted from the Third Energy Package.

Nord Stream 2 Falls Under Amended Third Energy Package

In 2017, the European Commission proposed to amend the Third Energy Package, regulating the use, operation, and ownership of gas pipelines within the EU, so that it would also be applied to foreign pipelines entering the bloc’s territory – such as Nord Stream 2. In February 2019, after extensive negotiations, European nations adopted this amendment. The latter went into effect in July 2019.

Any foreign pipeline entering EU territory and completed before that date, would be exempt from forcing its owner to either provide 50% of the pipeline’s capacity to third parties or to sell ownership over the EU portion of the pipe. Nord Stream 2 AG claims that by finalising the investments in Nord Stream 2 by that time, the company thus “finished” the pipeline before the amendment went into force according to EU law.

The Third Energy Package has been repeatedly criticised for being ineffective in fostering competition and curbing monopolies on the energy market in some areas. For instance, the German pipeline OPAL only operated at 50% capacity for several years due to there being no other company that could use it. The EU later exempted the pipeline from the Third Energy Package due to the operating company having no competitors.

Gazprom, one of the co-owners of the Nord Stream 2 pipeline, is the sole company legally permitted to sell Russian natural gas abroad and one of the few allowed to export liquefied natural gas. Other gas-extracting companies either sell their gas locally, or sell it to Gazprom for export. While bills allowing other companies to sell pipeline gas abroad in Russia and thus providing a potential solution to the Nord Stream 2’s Third Energy Package issues, have been discussed in the past, they were never passed.