Nord Stream 2 AG, the operator of the Nord Stream-2 project, is preparing for a possible court case with the European Commission because of a change in the EU Gas Directive. The head of Nord Stream 2 AG Matthias Warnig has written a letter to European Commission’s President Jean-Claude Juncker, asking him to confirm that Nord Stream-2 would be considered under the Directive not as a new, but as an already existing project, which would allow the gas pipeline to receive exceptions. Otherwise, according to Nord Stream 2 AG, the EU will violate provisions of the Energy Charter prohibiting discrimination against individual infrastructure projects.

On April 12th, Matthias Warnig wrote a letter to the European Commission’s President Jean-Claude Juncker, asking for clarification of the EU’s position on the Nord Stream-2 project in the context of changes to the Gas Directive. The text of the letter is published by the Politico, its main themes are contained in the official statement of Nord Stream 2 AG. Changes in the Gas Directive create a new regulatory regime for offshore gas pipeline projects in the EU from third countries. At the same time, for gas pipelines put into operation before the entry of these changes, a simple procedure for obtaining exceptions is provided. Mr. Warnig believes that Nord Stream-2 should refer to such "old" projects, as the decision on its implementation was made under the previous legislation and €5.8 billionhave already invested in the construction by the time of the adoption of the new version of the Gas Directive.

Otherwise, according to Nord Stream 2 AG, the EU will violate its obligations under the Energy Charter, according to which a member of the Charter can’t discriminate against some infrastructure projects relative to others. Matthias Warnig asks Jean-Claude Juncker to give an answer regarding the EU’s position on this issue by May 13th.

The EU Council finally approved the change of the Gas Directive on April 15th. Now, with regard to the Nord Stream-2 project, the EU legislation will apply to the section of the gas pipeline located in the territorial waters of Germany. This means that within this section Gazprom will need to provide access to third parties, the division of activities and transparent tariff setting.

Nord Stream 2 AG believes that the refusal of the EU to provide Nord Stream-2 with exceptions to the Gas Directive as the "old" project will "be a discriminatory measure that violates the international law and EU law, including the EU commitments under articles 10 and 13 of the Energy Charter Treaty".

Nord Stream AG 2 believes that "the amended Gas Directive lacks a clear definition of what is a “completed” gas pipeline". They note that if we talk about the section of the gas pipeline in the territorial waters of Germany, to which the Directive applies, its construction is completed. The project company emphasizes that the granting of exceptions to the "old" projects under the article 49a of the amended Gas Directive is intended to "take into account the legitimate expectations of existing operators".

"Regardless of whether the pipeline is “completed”, “half completed” or “almost completed”, the investor faces the same problems of return on investment. In any of these scenarios, prior to fundamental changes in the legislation, investors have already made commitments, spent significant financial resources and accepted investment risks," - Nord Stream 2 AG
believes.

They emphasize that in addition to €5.8 billion already invested in the gas pipeline, the project received all construction permits, apart frome Denmark - the only country that didn’t agree on the route of the gas pipeline - should only give consent to laying in its exclusive economic zone. "According to the UN Convention on the law of the sea (UNCLOS), permission for pipe laying in the exclusive economic zone is not required, therefore, the construction can’t be prohibited," - the project company believes. Russia is not a party to the Energy Charter Treaty. But Nord Stream 2 AG is registered in Switzerland, which joined the Charter.

"Nord Stream 2 AG is therefore an investor under the article 1(7)(a)(ii) of the Energy Charter Treaty, which has made significant investments in the EU in accordance with the article 1(6) of the Treaty. Therefore, the Nord Stream-2 project is clearly an investment made by the investor for the purposes of the Energy Charter Treaty," - Nord Stream 2 AG believes.

The project company is now awaiting clarification from the European Commission and will then assess "what next steps should be taken to protect our legitimate expectations and interests as an investor". Nord Stream 2 AG recalls that the Energy Charter Treaty provides for a mandatory three-month consultation period.

KeyFacts Energy Industry Directory: Rusmininfo