Germany suspends approval for Nord Stream 2 gas pipeline

Germany has suspended its approval process for the controversial Nord Stream 2 gas pipeline which would double its reliance on Russian gas following growing geopolitical pressure to scrap the project, the Guardian reports.

Energy markets across Europe surged after the German energy regulator suspended its certification process, in a big setback to Kremlin-backed Gazprom’s plans to extend Russian gas dominance via a new pipeline across the Baltic Sea.

The German energy regulator said it would not continue its approval process until the Nord Stream 2 company, which is registered in Switzerland, transfers its main assets and staffing budget to its German subsidiary.

“A certification for the operation of Nord Stream 2 will only be considered once the operator is organised in a legal shape compliant with German law,” the regulator said.

Germany’s decision to delay Nord Stream 2, which bypasses current pipelines that run through Russia’s nearest neighbours in Ukraine and Belarus, follows calls from western leaders to scrap the plan or risk destabilising the region.

Critics of the project fear Russia will use the pipeline as a geopolitical weapon in Europe amid the global gas crisis, while weakening Ukraine which relies heavily on revenues from shipping Russian gas to Europe via its gas transit network. Moscow denies this.

Europe faces a looming winter gas crisis, which has fuelled fears of a widespread industrial slowdown due to factory shutdowns and potential power outages. It is also expected to drive a cost of living crisis for homes and small businesses.

Gas prices have reached record highs in recent months, ignited by a global surge in demand after the Covid-19 economic slowdown last year, and fuelled by Russia’s reluctance to export extra supplies to Europe to help meet demand despite rocketing market prices.