The Nord Stream 2 gas pipeline is not exempt from European Union competition rules, a German court has ruled.
The operating company of the Baltic Sea pipeline failed in its bid to be excluded from certain EU regulations and must now unbundle its business.
The regional court decision is a blow to the pipeline but it is unlikely to prevent its completion.
The dispute centred on an amended EU gas directive, which requires pipelines’ owners and gas suppliers to be different. The law aims to ensure fair competition in the market and to prevent companies from potentially obstructing competitors’ access to supplies.
Last year, the operators of the Gazprom-backed Nord Stream 2 pipeline challenged the law, claiming it was discriminatory.
But on Wednesday Duesseldorf Higher Regional Court dismissed the case and ruled that the pipeline did have to meet the EU directive.
The project to carry gas from Russia to Germany under the Baltic Sea has been strongly opposed by many European governments, who suggest it is an attempt to increase the EU’s dependence on Russian gas.
Gazprom had argued that Nord Stream 2 had been completed from an economic and investment point of view, before the EU law came into effect in May 2019. According to the company, Nord Stream 2 runs for a total of 1230 kilometres, 54 kilometres of which are in German territory.
But the court agreed with Germany’s Federal Network Agency that the pipeline had not been fully constructed and was therefore not completed under law.
It was a matter of “a physically completely constructed or almost completely constructed pipeline,” said presiding judge Anne-Christin Frister.
The operators Nord Stream 2 can still appeal the decision to Germany’s Federal Supreme Court. Gazprom said it would evaluate the court’s verdict and “inform about the next steps in due course”.
“Nord Stream 2 AG maintains that the company is being discriminated against in an unlawful manner, as all other import pipelines that invested before the new rules came into force are eligible for such an exemption under the amended Gas Directive,” it added.
Following the court decision, the Kremlin also said that Nord Stream 2 is “purely a commercial project” to strengthen European energy security.
Meanwhile, the Federal Network Agency has welcomed the ruling that the company transporting the gas must now auction its capacity to third parties.