Denmark Threatens Timing of Nord Stream 2: Sources

William Powell, Chief Editor, Natural Gas World

Join William in our Big Gas Debate at EGC as he proposes the motion This house believes the opposition of many European countries will prevent Nord Stream 2 from progressing’ alongside Walter Boltz, Senior Advisor of European energy, ACER Board of Appeal.

This article was originally published by Natural Gas World on October 13, 2017.

Denmark’s parliament is considering a change to the law on the continental shelf that would, if approved, affect the routing and timing of the 55bn m³/yr Nord Stream 2 pipeline project. Sources not involved directly in the Russian-led project said that given the onset of winter and the difficulty of laying linepipe, it is now unlikely that the offshore pipeline will be operational before summer 2021.

Danish newspaper Jyllands Posten said that while it was right and proper for the government to decide what happened in its territorial waters, especially given the conduct of the Russian government, it was wrong that the foreign minister should make the energy minister responsible for the decision on allowing NS2 into its waters, in a way that precluded the possibility of an appeal before the courts.

Since the binding recommendation of the foreign minister is not a formal decision, it cannot be subject to judicial review, it said in an editorial October 13.

It is reasonable that Denmark, as the “master of [our] own house, has the most influence on what is happening in our own territorial sea.” However, that did not justify the approach now being proposed, which the paper described as not fitting for a country based on the rule of law.

NS2 did not comment on the likelihood of a delay. It said that it has applied for a route that is based on existing law as well as the guidance received from the Danish authorities during the successful implementation of the Nord Stream project.

Its shareholder and the five financial investors – French Engie, German Uniper and BASF, Austrian OMV and Anglo-Dutch Shell – have made significant commitments in the order of €4.5bn ($5.3bn) to implement this project, it said. Such long-term investment decisions that provide large-scale infrastructure to meet Europe’s energy demand depend on a predictable, stable and transparent legislative framework with clear criteria for permitting, it said. Passing the law, even though the permitting process is underway, would have a material negative impact on the project, in the words of OMV, in its submission to the Danish energy agency in the summer.

“Although we do not know the outcome [of the debate in parliament], any project developer in this situation has to consider alternatives available. This evaluation is ongoing,” NS2 told NGW.

Avoiding Danish waters would mean taking the line further north, with more work to be done on surveying the seabed and possibly clearing it of obstacles before laying work can start. Following the route of Nord Stream 1 would have been quicker as that work had already been done. Nord Stream 1 has been safely operating since 2012.