Denmark passes law to block Nord Stream 2

07 December 2017, Week 48, Issue 429

Denmark passed a law on November 30 allowing it to prevent the construction of Russia’s Nord Stream 2 gas pipeline through its waters on the grounds of security or foreign policy interests.

Previously, authorities could only block a pipeline project if it posed a risk to the environment. 

Scheduled for launch at the end of 2019, Nord Stream 2 will pump up to 55 bcm per year of Russian gas under the Baltic Sea to Germany, allowing Russia’s Gazprom to bypass Ukraine as a transit route. Denmark is among several EU members to have expressed fears that the project will give Moscow too much control over the bloc’s energy supplies. 

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The proposed route of the pipeline passes through Finnish and Swedish exclusive economic zones before entering Danish territorial waters. Nord Stream 2 has already applied for permission in Denmark, and its application is currently being reviewed by the Danish Energy Agency. The new law will take effect from January 1 next year, but will also apply to applications already submitted. Denmark’s energy and climate minister, Lars Christian Lilleholt, said in June a decision on whether to permit the pipeline would be taken in early next year. 

Finnish and Swedish authorities are anticipated to reach a verdict either later this year or in early 2018. 

Earlier, the Nord Stream 2 operating company warned it would consider revising the pipeline’s route if Danish lawmakers took steps to block its construction. One alternative route is north of the Danish island of Bornholm, placing the pipeline in international waters. 

Despite these obstacles, Gazprom insists that the project is moving forward. A spokesman for Nord Stream 2 told Russia’s TASS news agency on December 1 that 4.5 billion euros (US$5.3 billion) of contracts related to the scheme had already been signed with 600 firms. Construction of the pipeline’s offshore section is due to start in June next year. 

Speaking at a gas conference in Milan in early November, however, Nord Stream 2 CFO Paul Corcoran conceded that if Denmark applied its new law, Nord Stream 2 could slip behind schedule. 

"We might have to re-route, [and] that would cost more and probably cause a delay," he said.

Russia is anxious to get the pipeline up and running before the end of 2019, when its long-term gas transit contract with Ukraine is due to expire. If the project stalls, Moscow will have to negotiate a new agreement with Kiev – something it is anxious to avoid.

Edited by

Ryan Stevenson

Managing Editor

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