Nov 16, 2021 - World

German regulator pauses certification of Nord Stream 2 pipeline

 View of pipe systems and shut-off devices at the gas receiving station of the Nord Stream 2 Baltic Sea pipeline. T

View of pipe systems and shut-off devices at the gas receiving station of the Nord Stream 2 Baltic Sea pipeline in Lubmin, Germany, on Nov. 16. Photo: Stefan Sauer/picture alliance via Getty Images

Germany's network regulator said Tuesday that it paused its certification of the Nord Stream 2 pipeline due to an issue with the company's license under German law, the Associated Press reports.

Why it matters: The pause throws a wrench in the approval process of the already contentious pipeline — which would transport Russian gas to Europe under the Baltic Sea — and caused regional gas prices to rise.

Driving the news: "Following a thorough examination of the documentation, the Bundesnetzagentur 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 form under German law," the regulator said in a statement, per AP.

  • The news of the pause triggered an increase in natural gas markets in Europe, including in the U.K., where natural gas futures rose more than 9%, according to the New York Times.
  • The certification process will remain on pause "until the main assets and human resources have been transferred to the subsidiary," per AP.

The big picture: The U.S. and Ukraine have both opposed the Nord Stream 2 pipeline, which was completed this year but has not yet been in operation.

  • The pipeline is owned by Russian-controlled gas company Gazprom with investment from several European countries.
  • President Biden earlier this year waived sanctions on firms involved in the pipeline, which in 2019 stalled its progress, frustrating Germany and the European Union, Axios' Jonathan Swan reports.
  • Seeking to mitigate fears from members of Congress and Eastern European countries over Russia potentially using the pipeline against Ukraine, Biden and German Chancellor Angela Merkel reached a deal in July.
  • Per the agreement, the U.S. and Germany will intervene if Russia tries to "use energy as a weapon," set up a "green fund" to help Ukraine modernize its energy sector, and seek to ensure Russia continues to pay Ukraine around $3 billion in gas transit fees annually.

Go deeper: Russia's Gazprom says Nord Stream 2 pipeline is complete

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