Natural gas prices surge on suspension of Nord Stream 2 approval
UK and European Gas prices jump to 3-week highs
Natural gas prices in Europe and the UK jumped on Tuesday after Germany’s energy regulator temporarily suspended the approval of the Nord Stream 2 project.
After years of delays and US-led sanctions, the construction of the pipeline carrying natural gas from Russia to Germany via the Baltic Sea finished in September.
The longest sub-sea pipeline in the world, owned by state-backed Russian energy giant Gazprom, Nord Stream 2 required only final certification from the Bundesnetzagentur (Federal Network Agency).
In a statement, however, the agency halted the process, announcing: “It would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organised in a legal form under German law.
The regulator complained that the pipeline’s operator, Nord Stream 2 AG, is based in Switzerland, adding: “It decided not to transform its existing legal form but instead to found a subsidiary under German law solely to govern the German part of the pipeline.
“This subsidiary is to become the owner and operator of the German part of the pipeline. The subsidiary must then fulfil the requirements of an independent transmission operator as set out in the German Energy Industry Act.”
The Bundesnetzagentur further specified that the approval process will stay suspended until Nord Stream 2 AG’s main assets and human resources have been transferred to the German subsidiary, which will then need to submit documentation as a new applicant.
By 16:00 (GMT) British natural gas futures traded 15.4% higher at 236.46 pence per therm, a near one-month high.
Dutch TTF Gas Futures, the European benchmark, stood 18.3% higher at €94.775 per megawatt-hour.
The sudden surge will reignite in the minds of European politicians, regulators, business leaders and citizens fears of prices once again soaring to record levels.
In October, natural gas prices in both Europe and the UK rose to new all-time highs. In Europe the blame was laid at the feet of Russian president Vladimir Putin, who was accused of limiting exports before winter to speed up Nord Stream 2’s certification.
Putin himself rejected this notion before eventually directing Gazprom to increase supply to Europe.