When German Chancellor Angela Merkel and Russian President Vladimir Putin meet at the Meseberg Palace outside Berlin on August 18, the two leaders will reportedly discuss the Nord Stream-2 gas pipeline, which plans to transport Russian gas to Germany as well as Merkel’s demand that some gas transit via Ukraine is preserved.

“I would expect that the Merkel-Putin meeting at Messeberg could result in a broad declaration, which would re-emphasize all the points already made in respect of Nord Stream-2, that Nord Stream-2 proceeds as is under applicable laws provided that some transit across Ukraine is preserved,” Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies, told New Europe on August 15, explaining that transit across Ukraine could then be addressed separately in the process of trilateral EU-Russia-Ukraine talks, the first round which has recently been held in Berlin, mediated by European Commission Vice President for Energy Union Maroš Šefčovič.

“The fact that the Merkel-Putin meeting is due to take place at Messeberg where the German-French declaration on re-invigorating and strengthening the EU was signed just a few months ago – which inter alia includes provisions on ‘looking into new ways of increasing the speed and effectiveness of the EU’s decision making’ in its common foreign and security policy – is symbolic as it suggests that whatever is agreed during the meeting will be done in the spirit of the Messeberg declaration and is therefore done as a matter of common EU interest,” Yafimava said. “Should this be the case, and should the Merkel-Putin meeting effectively give a political green light to Nord Stream-2, I would not be surprised if Nord Stream-2 would start pipe laying offshore shortly afterwards,” the Oxford Institute for Energy Studies expert added.

All Russian permits for NS-2 received

On August 14, the developer for pipeline announced that Nord Stream-2 received a permit for the installation of an underwater pipeline in Russia’s territorial waters. The permit has been issued by Russia’s Federal Agency for the Supervision of Natural Resources Use (Rosprirodnadzor) in accordance with the established procedure. The permit covers a section of approximately 114 kilometres inside Russia’s territorial sea. The Russian  Ministry of Construction and Utilities had previously issued a construction permit for Nord Stream-2 within Russia’s borders. All the permits necessary for construction of the Russian section of the Nord Stream-2 Pipeline have now been received.

“There was no serious doubt that the Russian permit would be granted, so this was not really a hurdle,” Yafimava told New Europe.

Danish hurdle

In addition to Russia, Germany, Finland and Sweden have granted all the permits necessary for construction of the planned pipeline within their jurisdictions. The national permitting procedure in Denmark is ongoing.

“The absence of the Danish permit is indeed a hurdle – NS2 has recently submitted another application to the Danish authority in respect of the alternative route (north of Bronholm) while the previous application in respect of the original route (south of Bronholm) is also pending – this hurdle still needs to be overcome,” Yafimava said.

She explained that while Denmark would be able to reject the southern route on the basis of its new law allowing not to allow construction of pipelines in its territorial waters, which would be the case with the southern route, on foreign policy and security grounds – should it decide to do so, which it has not done to date – the Danish energy agency would not be able to reject the northern route on any grounds other than environmental – and this would be next to impossible to justify – as it would only pass through the Danish Exclusive Economic Zone but not territorial waters.

“It is understood that the southern route is better than the northern route from the environmental point of view. Denmark has notably stated on several occasions that it does not want to take a decision on Nord Stream-2 alone on its own, arguing that it is an EU-wide issue – which explains why it has not made any decision yet,” Yafimava said.

She noted, however, that if Merkel and Putin effectively gave a political green light to Nord Stream-2, “I would also not be surprised if Denmark were to eventually grant a permit, possibly even in respect of the southern route, which is better from the environmental point of view”.

WTO panel report on EU-Russia dispute

Yafimava said it is also noteworthy that the recent World Trade Organization (WTO) panel report on the dispute between Russia and the European Union in respect of Third Energy Package compatibility with the WTO law while positive for the EU on the majority of issues, is also positive for Russia in respect of treatment of Nord Stream-1 onshore extension (Germany’s OPAL pipeline) while also making it very difficult for the EU to discriminate against Nord Stream-2 onshore extension (EUGAL) in the future.