FRANKFURT/BERLIN – The Nord Stream 2 pipeline has been completed, and it’s ready for Russian gas transport to Europe. But nothing flows yet as the Nord Stream 2 pipeline still requires clearance by Germany’s energy regulator.

The United States and Ukraine have resisted Europe’s controversial energy project. It is headed by Gazprom, the Russian giant of gas.

The German regulator asked the Swiss-based Nord Stream 2 AG to give assurances that it would not violate competition rules last week. It could be several months until the 1,200km pipeline is given the go ahead.

What is the Hold-up?

The Federal Network Agency of Germany – the agency that regulates Germany’s electricity and gas telecommunications sectors – must make a recommendation by January 1st on whether it will approve the certification of the Baltic Sea-run pipeline from Russia to Germany.

Although technical requirements were met, it is still unclear if Gazprom will adhere to European unbundling rules. These regulations require that pipeline owners be distinct from gas suppliers in order to maintain fair competition.

Nord Stream 2’s operator asserts that the EU rules were designed to torpedo the pipeline. Last week, a top European court advisor recommended that Gazprom challenge the EU rules.

Nord Stream 1, a sister project of the same size as this one, was exempted by unbundling rules from its opening in 2011, because it was not considered a direct supplier but an interconnector.

WHAT HAPPENS AFTER A RECOMMENDATION

After a committee of three independent members at the network agency makes its recommendation, it is sent to the European Commission. The European Commission has two more months to reply.

Both bodies must agree that the pipeline meets all regulations before certification can be issued quickly. If they don’t, the process may be delayed further.

The two sides must agree on any issues that might arise before certification can be granted. It could therefore take until spring 2022 to get the pipe certified.

IS THE AGENCY ABLE to FIX THE PIPELINE?

In effect, it is no. Gazprom can pump gas without certification, even though it is required.

If the operator starts operating without certification, it is subject to a 1 million Euro ($1.2 Million) penalty.

It can launch an investigation as a regulator, but it is not allowed to prevent gas flow in the short term.

Gazprom said that Nord Stream 2 will deliver 5.6 Billion cubic meters bcm in August, which is about tenth the annual pipeline capacity. If supplies begin in October, it could be ready for delivery in 2021.

What’s going on behind the scenes?

According to two sources, Angela Merkel (German Chancellor) has repeatedly made clear to Vladimir Putin, Russian President, that following the rules is crucial in order for him and the pipeline’s political support, according the two officials who are familiar with the situation.

Merkel stated openly that Nord Stream 2’s political foundation was Russia’s promise to continue using Ukraine as a gas transit route.

One source said that Putin is intelligent enough to recognize the negative sentiments among German politicians about the project, and therefore he shouldn’t give any reason for operations to be endangered.

ISN’T THE NETWORK AGCY POLICIICALLY INEPENDENT??

No. No.

According to a spokesperson for this agency, certification cannot be granted until the Federal Ministry for Economic Affairs and Energy has determined that it will not endanger the security of gas supply in the Federal Republic of Germany and/or the European Union.

Although the Economy Ministry stated that it was currently conducting this assessment, it hasn’t given any timeline. The agency can’t certify Nord Stream 2 if it is determined that it will threaten gas supply.

GERMANY’S ELECTION GOES OFF WITH A CHANGE?

Germany’s Economy Ministry, headed by Peter Altmaier (a member Merkel’s conservative party), is currently in operation until a new government takes place.

Merkel is the current head of the country and will continue to do so until a new coalition forms. Germany has recently reached a deal to let the controversial pipeline go forward under Washington’s direction.

According to two sources familiar with the matter, this makes it very difficult for any government to reverse the agreement.

Olaf Scholz led the Social Democrats’ victory last month and has a strong chance of succeeding Merkel as chancellor. He is also in favor of the pipeline.

($1 = 0.8617 euros)