Russia’s Gazprom, the national gas producer, is just weeks away from completing the controversial Nord Stream 2 pipeline, and once completed, gas could flow directly from Russia to Germany, thereby reducing flows on the main pipeline via Ukraine. This is a line that for years has provided Ukraine with a major source of revenues, and one of the reasons why the U.S. has been against the pipeline. Just recently, the US applied sanctions on two Russian entities involved in the gas link while German Chancellor Angela Merkel has offered reassurances that Ukraine would not suffer from the construction of the Nord Stream 2 pipeline. The German energy minister has chipped in by saying Germany would not create obstacles while Ukraine said talks about its future as a transit country had been vague.
The latest twist in this saga has come today from Dusseldorf Higher Regional Court. It ruled that the Nord Stream 2 pipeline is not exempt from European rules that require the owners of pipelines to be different from the suppliers of gas to ensure fair competition. This ruling may further delay the starting time for when gas will flow
With gas prices in Asia also surging, arrivals of LNG shipments to Europe has slowed, thereby increasing further the continent’s reliance on Russian supplies. As a result of the reduced gas flows, European power producers have been forced to buy more coal and due the higher level of carbon emission, the cost of buying pollution offsets via the European Emissions Trading Systems (ETS) has risen to record levels near €60/tons.