Gazprom’s Nord Stream 2 pipeline blocked by Denmark?

Denmark’s government wants to change the country’s laws in a way that could allow a proposed Russian gas pipeline to Europe to be blocked, in a sign of the growing unease in the EU over the project.

EU officials have been seeking ways to delay or halt Gazprom’s Nord Stream 2 pipeline, fearing the initiative will strengthen Russia’s dominance of the European gas market and help the state-controlled energy group bypass Ukraine. Lars Christian Lilleholt, Denmark’s energy minister, told that the government was proposing a bill to allow foreign and security policy considerations to be taken into account in assessing whether projects such as Nord Stream 2 should be allowed. The Danes at present only consider the environmental impact of such projects. This would be unlikely to stop the Nord Stream 2 project as it follows the route of the first Nord Stream pipeline from Russia to Germany. Denmark and Sweden have a say over the project as it goes through their territorial waters.

“The Danish government has not decided whether or not such new legislation will be applied to the Nord Stream 2 application at hand,” Mr Lilleholt said. Brussels says the Nord Stream 2 project runs counter to European energy objectives to diversify gas supply, cut energy reliance on Russia and keep gas flowing through Ukraine, which depends heavily on transit revenue from existing pipelines. The EU argues that additional supplies of Russian gas are not required as it expects additional gas to be available from construction of LNG terminals, and from Azerbaijan through the Southern Gas Corridor project.

However, the European Commission has been struggling to find a legal basis to challenge NS2. This year its legal services department decided that European energy laws did not apply to the offshore pipeline. Germany’s network regulator agreed with that assessment. The commission has now told Sweden and Denmark it wants to negotiate an agreement with Moscow that applies the key principles behind the energy laws. These include transparent pipeline operation, non-discrimination in setting fees, third party access, and separation of supply and transmission. Nord Stream 2 submitted an application for a Danish construction permit last week. “We welcome the statement of the Danish authorities that they will now commence the approvals procedure in accordance with the currently applicable legislation,” the group said.