Nord Stream 2 AG, the operating company of the Nord Stream 2 gas pipeline project, has been forced to comply with the demands of the Danish regulator and submit an application to lay the pipe within Denmark’s exclusive economic zone in the Baltic Sea.
This is the third such application that the company has submitted. Originally, Gazprom intended to lay the pipeline along the same route as the first Nord Stream pipe, but when it became clear that Denmark could simply prohibit the laying of this pipeline in its territorial waters, the company requested permission to lay the pipe in international waters, but within Denmark’s exclusive economic zone. Now the Danish regulatory authority has suggested yet another route in the same exclusive economic zone. The consideration of the application has not yet begun, but once it begins, an ecological assessment will be carried out. Only after the assessment will Denmark decide whether to authorize the construction.
Technically, Denmark cannot simply prohibit the construction of a gas pipeline outside its territorial waters, but it has the right to determine how the construction must be done from an ecological perspective. However, there is no clear understanding of when the ecological assessment will be performed or when the results will be evaluated. The only thing that can be said with relative certainty is that the Nord Stream 2 project is unlikely to make any progress whatsoever in 2019, and its operator will be very lucky indeed if it is able to resume by 2020.
In effect, this will mean one thing: Gazprom has failed to carry out Putin’s order to bypass Ukraine’s gas transport system the moment the current Russian-Ukrainian gas transit agreement expires. If Gazprom had succeeded, it would have been able to dictate the terms of any future gas transit agreement with Ukraine, or even completely cease using Ukraine’s services. However, in light of the delay to Nord Stream 2, Gazprom will still need to reach an agreement with Ukraine when the current contract expires.
This is a severe blow to Gazprom, especially in view of the current tense relations with Belarus, whose president is threatening to take the country’s pipelines offline for repairs.
Gazprom will be forced to reach an agreement with Naftogaz of Ukraine, especially since Moscow suspects that Denmark will respond to the Nord Stream 2 construction applications only after such a Russian-Ukrainian gas transit contract has been signed.