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Denmark still working on Russia's Nord Stream 2 gas pipeline permits

Brussels — Requests for the final permit Russia needs to finish laying its Nord Stream 2 gas link to Germany are still being processed, with no firm date for a decision, Danish Energy Agency spokesman Ture Falbe-Hansen said Thursday.

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This is creating uncertainty as to whether Russia's Gazprom, the sole owner of Nord Stream 2, will be able to complete the link's two, 27.5 Bcm a year pipelines by the end of 2019, when its transit contract with Ukraine expires.

If that start date is delayed, for example, because of a late permit, Russia would likely have to continue using the Ukrainian route to meet its contractual supply obligations to European customers until Nord Stream 2 was available.

That would require Russia to agree new transit terms with Ukraine for 2020, with Ukraine insisting these should be in line with EU market rules.

The Nord Stream 2 project company has already hedged its bets by submitting a permit request for an alternative route in August 2018, after a request submitted in April 2017 for a route going through Denmark's territorial waters became subject to meeting new national security criteria.

This alternative route requires a new Espoo Convention debate, where the "affected parties" next to the main route -- Estonia, Latvia, Lithuania and Poland -- can comment on trans-boundary impacts.

All four have now made such comments, Falbe-Hansen said, and the Danish Energy Agency is reviewing them and the results of a national environmental impact assessment, while also assessing the permit request.

"It is currently not possible to say how long this process will take, as it depends, among other things, on the coming process with countries in relation to the Espoo Convention," he said.

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FIRST REQUEST PROCESS AT 'ADVANCED' STAGE

Falbe-Hansen said work on the first permit request "is at an advanced stage," which he also said in a comment last August.

Under a change to Danish law in force since January 2018, projects going through Danish territorial waters such as Nord Stream 2 have to be assessed by the foreign affairs ministry to see if they are compatible with Denmark's foreign, security and defense policy.

If the foreign affairs ministry tells the energy ministry that Nord Stream 2 is not compatible, the energy ministry will refuse the permit.

If the foreign ministry says Nord Stream 2 is compatible, the Danish Energy Agency will check it complies with the required environmental and safety criteria, and if it does, the energy ministry will grant the permit.

The second permit request is for an alternative route that avoids Denmark's territorial waters, and so does not have to be assessed by the foreign affairs ministry.

It will be assessed by the Danish Energy Agency on environmental and safety criteria only.

Falbe-Hansen said last August that it usually takes around 12 months to process a permit application, depending on its complexity, the results of the environmental impact assessment in Denmark, and potential trans-boundary impacts in affected countries.

That means Nord Stream 2 may have to wait until around August this year for a decision on the alternative route permit, if the first requested route is refused.

There is no legal deadline for taking decisions on either permit request.

-- Siobhan Hall, siobhan.hall@spglobal.com

-- Edited by Jonathan Dart, newsdesk@spglobal.com