European gas futures surged 11 percent on Monday after German foreign minister Annalena Baerbock said the Nord Stream 2 pipeline could not be permitted in its current form because it did not comply with EU law.
Speaking on ZDF TV late on Sunday evening, Baerbock said the three parties that make up the new German government — Social Democrats, Greens and Free Democrats — had agreed that all energy projects, including Nord Stream 2, must be in accordance with EU energy legislation.
“And that means that, as things stand at the moment, this pipeline can’t be approved because it does not fulfill the requirements of European energy law, ” she said.
The situation on the Ukrainian border, where Russia has amassed an estimated 100,000 troops, was “also a factor”, Baerbock said. “The last government discussed with the Americans that if there are further escalations this pipeline can’t come online,” she added.
The pipeline was top of the list when US officials considered potential sanctions that western countries could threaten against Russia.
Baerbock’s comments suggest that Germany’s position on Nord Stream 2 could harden now that the Greens, who have long opposed the project, are in charge of the foreign ministry. However, the Social Democrats, the party of Chancellor Olaf Scholz, have traditionally supported the pipeline.
highest levels since early October. The European gas benchmark for delivery in January jumped as much as 11 per cent on Monday to a high of €117.25 per megawatt-hour, up from €105-35 on Friday and just under the record high of €117-50/MWh in October.
Spells of cold weather and stable but weak flows from Russia to western Europe have resulted in an accelerated drawdown of gas stocks. Across Europe, gas storage facilities are now just 62.8 per cent full, more than 10 per cent below seasonal norms. If the drawdowns continue at current rates, storage