EU court rejects Russia's challenge to Nord Stream 2 unbundling rules

The General Court of the Court of Justice of the European Union has dismissed Nord Stream 2 (NS2)’s action against a directive extending internal market rules for natural gas to pipelines from third countries. The EU’s second-highest court said this today on its website. In 2019, the European Union amended its Gas Directive so that its rules would also apply to pipelines from third countries. Nord Stream 2 is a subsidiary of Russian state-owned gas company Gazprom.

The court found that Nord Stream 2 could have anticipated during construction of its pipeline that it would not meet EU criteria. The pipeline was completed in 2021, but no gas ever flowed through it. It was completed before Russia’s invasion of Ukraine, which began in February 2022, but never entered commercial operation. One of NS2’s pipes was blown up, along with the Nord Stream 1 (NS1) pipeline, in September 2022. Nord Stream 1 had been in operation since 2011.

The pipelines were built to transport 110 billion cubic metres of natural gas a year from Russia across the Baltic Sea to Germany. They never reached that level, however. In 2021, NS1 transported more than 59 billion cubic metres of the commodity.

Nord Stream 2 AG, Gazprom’s Swiss subsidiary, „made and continued its investments in its pipeline at a time when it had no assurances that EU law would no longer apply to its pipeline. On the contrary, Nord Stream 2 AG could have foreseen that the EU institutions and a number of Member States, which had taken a position to this effect long beforehand, would use their powers to extend internal market rules to pipelines from third countries, such as the Nord Stream 2 pipeline,“ the court’s statement said.

The Wall Street Journal (WSJ) reported last week that an American financier had expressed interest in buying the damaged Nord Stream 2. On Tuesday, the Kremlin said in response, according to Reuters, that it had no information that state-controlled Gazprom wanted to sell the pipeline.