Natural gas prices rise after Germany suspends approval of Russian pipeline

prices of natural gas in Europe soared this Tuesday (16) after the Germany confirmed that it has suspended the certification process for a controversial Russian gas pipeline called Nord Stream 2.

The German energy market regulator said in a statement that it could not certify Nord Stream 2 as an independent operator because the company was headquartered in Switzerland, not in Germany.

“After a thorough examination of the documentation, the [regulador] concluded that it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organized in a legal manner under German law,” he added.

European natural gas futures prices have risen by 10%, which could hurt even more businesses and households who are already paying much higher energy bills. Leading energy traders have warned of the risk of blackouts in Europe in the event of a colder-than-normal winter.

The German decision comes at a time of growing tension between the European Union and the Russia in relation to Ukraine and a immigrant crisis on the Belarus-Polish border.

The European Union gets around 40% of its natural gas from Russia. Nord Stream 2, which bypasses Ukraine and connects Russia directly to Germany, was completed in September despite years of opposition from countries like the United States, which warned that the project would increase Moscow’s influence in Europe.

Risk of “successive blackouts”

The Prime Minister of the United Kingdom, Boris Johnson, said on Monday (15) that the European Union faced “a choice” between staying with Ukraine or approving Nord Stream 2.

“We hope that our friends [europeus] recognize that there will soon be a choice between channeling more and more Russian hydrocarbons into giant new pipelines and defending Ukraine and the cause of peace and stability,” Johnson said in a speech in London.

Russia has denied withholding gas to Europe this year to gain political influence, but Deputy Prime Minister Alexander Novak said last month that “early completion of certification” for Nord Stream 2 would help “cool down the current situation”.

Natural gas prices have soared this year in Europe, where fossil fuel plays an essential role in power generation and home heating. Leading industry experts were already warning of the risk of shortages this winter ahead of Tuesday’s news.

“We don’t have enough gas right now, to be honest. We’re not winterizing,” Jeremy Weir, president of energy trading company Trafigura, said at a conference hosted by the Financial Times. “So there is a real concern that… if we have a cold winter, we could have successive blackouts in Europe.”

Ukraine warns of Gazprom “tricks”

Germany’s energy regulator said Nord Stream 2, which is owned by Russian state-owned Gazprom, is planning to establish a German subsidiary to own and operate the German section of the pipeline.

Once key assets and staff have been transferred to the subsidiary, and provided it meets all relevant legal requirements, the certification process can be resumed, he added.

A Ukraine welcomed Germany’s decision to suspend the approval process. But he urged the West not to fall for what he called “Gazprom tricks” by announcing the formation of a German subsidiary.

“This is a mockery of European rules. This is neither in spirit nor in letter of European legislation on pipeline certification,” said Yuriy Vitrenko, chief executive of Ukraine’s state-owned energy company Naftogaz, in a Facebook post confirmed to CNN by the company’s press office.

“In particular, we asked the US government to impose sanctions on the operator Nord Stream 2, which Gazprom claims to have created. These new sanctions should last at least until Russia stops using natural gas as a weapon and acts in accordance with European rules,” he added.

*(Translated text. Click here to read the original, in English)