Natural gas prices in Europe soared higher after Germany indicated this week it had no intention of approving the Nord Stream 2 gas pipeline project before requirements under German law were satisfied.
However, Foreign Minister Annalena Baerbock also said that the situation in Ukraine was also a factor in the German government's decision on the matter.
"In the event of further escalation, this gas pipeline could not come into service," Annalena Baerbock told German media, as quoted by AFP, earlier this week.
The remarks follow a comment from Germany's new Prime Minister, Olaf Scholtz, that "It would be a serious mistake to believe that violating the borders of a European country would remain without consequences."
Meanwhile, the certification process for the infrastructure has been suspended by the German authorities because the pipeline must have an operator that is incorporated under German law.
This means that the commissioning of the pipeline could be delayed until March next year. It could be delayed even further because after Germany approves it—if it does—the project will have to go to the European Commission, which would be tasked with making sure it complies with EU regulations.
As a result, natural gas prices on the continent topped $1,400 per 1,000 cubic meters for the January futures. New threats from Belarus that it would turn the transit gas tap off for Europe if the EU decided to impose more sanctions on Minsk did not help matters, adding to upward price pressure.
Meanwhile, the European Union is this week discussing measures to tackle the gas shortage that is fueling the price rally and threatening energy supply this winter. Among the measures are joint gas buying for member states and more disciplined gas storage management to create strategic reserves to protect the countries and consumers.
By Irina Slav for Oilprice.com
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