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German court upholds the EU gas directive regarding NS2

The Higher National Court in Düsseldorf dismissed the complaint by the Nord Stream 2 gas pipeline owner against the negative decision by the Federal Network Agency (BNetzA), the German regulator regarding derogation, which is the exemption from the rules of operation regulated by the gas directive.

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Derogation proceedings were initiated at the request of Nord Stream 2 AG on January 10, 2020. The owner of the gas pipeline applied to the BNetzA for derogations from: ownership unbundling, third-party access and the establishment of a transparent tariff regime resulting from infrastructure costs.

In accordance with the gas directive, the derogation may apply to gas pipelines connecting third countries with the EU that were built until May 23, 2019. On this basis, the German regulator BNetzA refused Nord Stream 2 AG a derogation for the gas pipeline. The owner of the gas pipeline appealed against this decision to the court in Düsseldorf, which upheld the regulator’s decision.

Poland’s gas giant PGNiG SA and its subsidiary PST were active participants in the proceedings. As reported by PGNiG, the German court shared the company’s view, stating that Nord Stream 2, as a gas pipeline not built before the date when the revision of the gas directive came into force, does not meet the basic condition entitling them to apply for a derogation.

EU regulations require that companies producing, transporting and distributing gas within the territory of the Community be “separated” – to ensure fair competition on the market. Wednesday’s ruling means that the gas transport company has to sell its capacity to other market participants.

PGNiG stressed that in cooperation with the Polish government, it consistently takes steps to ensure the enforcement of EU law both regarding the Nord Stream 2 gas pipeline and other European gas pipelines.

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