June 27, 2017 / 8:48 AM / 3 years ago

European gas shippers warn Nord Stream 2 talks could deter investment

LONDON, June 27 (Reuters) - Six European gas transmission operators have warned the European Commission that talks with Russia over the Nord Stream 2 gas pipeline project could create legal uncertainty for future pipeline projects and put infrastructure investments at risk.

The Commission this month asked the EU’s 28 governments to give it the authority to negotiate with Russia to ensure EU laws are respected in building Nord Stream 2, a project which has divided member states.

The new pipeline, which will have capacity to pump 55 billion cubic metres of gas a year to a terminal in Germany, is expected to start operating in 2019.

Six companies - Austria’s Gas Connect, Czech Republic’s NET4Gas and Germany’s Fluxys, ONTRAS, Gascade and Gasunie - said the negotiations with Russia could “trigger considerable adverse effects”, in a letter to European Commission President Jean-Claude Junker seen by Reuters.

Russian gas exporter Gazprom already sends gas to Germany across the Baltic Sea via the Nord Stream twin subsea pipelines. The proposed Nord Stream 2 project would add a second twin pipeline across the Baltic, doubling capacity to 110 billion cubic metres (bcm) per year.

Backers of the project argue it would strengthen the EU’s security of supply and encourage competition in the European gas market.

They are concerned that if Nord Stream 2 receives different treatment to other pipeline projects it could legal uncertainty for future pipeline projects.

“The envisaged negotiations also carry the risk of creating other major uncertainties for investments into gas infrastructure,” the letter said.

In March, transmission system operators sought capacity on the Eugal pipeline, a planned German transit link for Nord Stream 2 in an auction.

Based on the outcome of those auctions, some of the companies have started to invest in new gas infrastructure assets, at a cost of 3-4 billion euros.

The letter added that delays to Nord Stream 2 could cause “considerable harm” to the companies and could deter future investments.

The Commission wants to diversify the EU’s gas supply and has said the pipeline could let “a single supplier” - Russia - strengthen its position in the EU market.

Eastern European and Baltic countries argue that Nord Stream 2 would make the EU a hostage to Russian energy supply, while those in northern Europe - especially main beneficiary Germany - see the economic benefits. (Reporting by Nina Chestney and Alissa de Carbonnel; editing by Jason Neely)

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