Nord Stream 2’s opponents look for legal ammunition

EU countries turn to energy regulations in an effort to stymie a Russian pipeline.

Central and Eastern Europe’s hopes of derailing Russia’s plans to expand the Nord Stream gas pipeline rely less on politics and more on finding ways to prove the project violates EU rules by drilling down into the bloc’s energy and competition law.

“Politics has its limits,” said Simone Tagliapietra, an energy fellow at the Brussels-based Bruegel think tank. “You can dislike the promoter, but if the project is shaped in line with EU rules, you cannot stop it.”

Sijbren De Jong, analyst at The Hague Center for Strategic Studies, said: “The real test is a legal test.”

The Gazprom-backed plan has caused a political backlash over in recent months, making it onto the agenda of the EU leaders’ mid-December summit.

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CEE countries argue that the scheme to double the capacity of the pipeline, which runs under the Baltic Sea from Russia to Germany, weakens the EU’s energy security by increasing its dependence on Russian gas, and undermines the Commission’s flagship energy union project. Slovakia and Ukraine would also lose a significant amount of money from transit fees.

European Council President Donald Tusk, a former Polish prime minister, said on December 18 that Nord Stream 2 would do little to help the EU achieve its goals of diversifying its gas supplies and routes. However, he also said it’s up to the European Commission to carry out the technical and legal analysis of the project.

In an interview with Poland’s Dziennik newspaper, Konrad Szymański, Poland’s EU affairs minister, said the key element for stopping the proposed pipeline is to pay attention to the rigors of EU law.

“We want in a reasonable way to raise the problem with the realization of such a large infrastructure project,” he said, calling it a way of “de facto avoiding the sanctions levied against Russia.”

Nevertheless, it is “extremely complicated” to figure out where and how EU energy laws apply to the proposed route of Nord Stream 2, said Tagliapietra.

“You ask these regulatory questions to the regulators and you have different answers,” he said. “The impression is that there is always some room for maneuver.”

Tiny loopholes

Those opposing the project have questioned its conformity with the EU’s third energy package, a set of laws aimed at liberalizing the energy market. Seven EU countries wrote in late November to Maroš Šefčovič, the Commission’s vice president in charge of the energy union, saying that Nord Stream 2 must meet the EU’s “ownership unbundling,” meaning the gas supplier — Gazprom — cannot be the same as the owner of the pipeline.

However, some officials have doubts that the third energy package would apply to Nord Stream 2, since it is an offshore pipeline and the laws would kick in only once the infrastructure touches EU territory.

Šefčovič, a Slovak, has said the Commission is in contact with Germany’s regulator, the Bundesnetzagentur, to collect information about the project’s exact parameters.

De Jong said the Commission’s legal tools today are much better developed compared to five years ago, when the original Nord Stream pipeline was built. Arguing that the third energy package does not apply offshore for Nord Stream 2, “to me sounds like finding the tiniest loophole in EU regulations to make [the project] happen,” he said.

Germany is trying to keep much of the project’s legal approvals under national competency, according to a Kremlin transcript of an October meeting between Russian President Vladimir Putin and Sigmar Gabriel, Germany’s economy and energy minister.

But there may be some headaches for the offshore section as well. Nord Stream 2 would cross through the economic zones of Russia and Germany, but also Finland, Sweden and Denmark, which have to issue their own permits.

The project’s fate may rest with the Nordic countries, said De Jong. These countries “apply regulations literally as they were written down,” he said.

“It is not likely they will take a political stance because that may undermine their position in other dossiers where they take a very legalistic approach,” he added.