Nordstream 2: red tape delaying pipeline progress

While some had been hoping for the Nordstream 2 gas pipeline to come online this month, a recent decision from the German energy regulator, the Bundesnetzagentur, means that any hope of gas flowing into Europe via this new delivery channel has now been set back until sometime in 2022.

Bureaucracy (rather than anything more fundamental) caused the delay, as the project developers  are yet to set up a German subsidiary company for Nordstream 2, as is required by German law.

It remains noteworthy that the completion of the new pipeline does not necessarily mean the end for existing gas flows transiting via Ukraine either.

Germany has already publicly stated that it will continue to extend the Ukraine gas transit agreement for another 10 years. 

Many experts expect that having both the Nordstream 2 and existing Ukranian pipelines in operation will alleviate price pressure caused by the physical limitations of gas flows into Europe.

That said, as the global gas crunch continues, a reduction in flows of the fuel from Russia into Europe has not only been due to physical limitations.

Russia has made losses on long-term gas contracts in recent years and has simply no economic incentive to flood the market with more gas and therefore dampen the price according to some experts.

Others have suggested that due to demand for the fuel within Russia, it may not be physically possible for the country to produce more of the commodity than is currently the case.