Gas prices soar as Germany suspends Nord Stream 2

Germany’s energy regulator suspended the approval process for Russia’s Nord Stream 2 gas pipeline on Tuesday, dealing another setback to the geopolitically sensitive project and causing Europe’s sky-high gas prices to soar further.

The regulator said the Swiss-based “Nord Stream 2 AG” operating company first needed to become compliant with German law before it could be certified, potentially delaying the project’s start date.

Benchmark European gas prices jumped around 10 percent higher on the announcement, adding to jitters on a continent already facing soaring energy bills – with winter fast approaching.

Critics have in recent weeks accused Moscow of intentionally limiting gas supplies to Europe and driving up prices in an effort to hasten the launch of Nord Stream 2, a claim Russia denies.

Russia’s state-owned gas giant Gazprom holds a majority stake in Nord Stream 2. Germany’s Uniper and Wintershall, France’s Engie, the Anglo-Dutch firm Shell and Austria’s OMV are also involved.

The US$12 billion has for years been dogged by delays and drawn fierce criticism from Germany’s eastern European Union allies like Poland and from the United States.

The Baltic Sea pipeline is set to double supplies of cheap natural gas from Russia to Germany, which the EU’s top economy says is needed to help it transition away from coal and nuclear energy.

But opponents say the recently completed pipeline will increase Europe’s energy dependence on Russia – which already provides a third of Europe’s gas.

Crucially, the pipeline also bypasses Ukraine’s gas infrastructure, depriving that country of much-needed transit fees.

Washington has called the project a “bad deal for Europe”. (AFP)