Germany shelves Nord Stream 2 pipeline

Germany is halting the controversial Nord Stream 2 pipeline in light of Russia’s incursion into Ukraine, Chancellor Olaf Scholz said.

The undersea pipeline, meant to ferry natural gas directly from Russia to northern Germany, is owned by a subsidiary of Russia’s state-owned Gazprom. Berlin has previously been reluctant to impose sanctions that would affect Nord Stream 2.

But at a press conference Tuesday, Scholz said that “the situation today is fundamentally different and therefore, in light of recent events, we must also reassess this situation … also with regard to Nord Stream 2.”

He said he had asked the German economy ministry to withdraw a binding opinion from October last year that stated the pipeline posed no security-of-supply threats.

“This sounds technical, but it is the necessary administrative step so that no certification of the pipeline can now take place,” Scholz added. “And without this certification, Nord Stream 2 cannot go into operation.”

Shortly after, the economy ministry announced it was halting the certification process.

It was a surprise move from Scholz, who had at times avoided even mentioning the pipeline by name in recent days, and came after Russian President Vladimir Putin ordered troops into the self-declared "people's republics" of Donetsk and Luhansk in eastern Ukraine on Monday night.

Ukraine has long described the €10 billion project — whose construction was completed in September but has yet to start operating — as a threat to its security. Nord Stream 2 bypasses the country, and Kyiv had raised concerns that this would allow Russia to shut off gas transport via existing land pipelines, costing Ukraine billions in transit fees.

Foreign Minister Dmytro Kuleba welcomed the decision. "This is a morally, politically and practically correct step in the current circumstances," he said. "True leadership means tough decisions in difficult times. Germany’s move proves just that."

Scholz, who was speaking at a press conference with Irish Prime Minister Micheál Martin, said Russia's move to recognize the separatist areas as independent was "a serious breach of international law."

He added that the economy ministry — led by the Greens, which tend to have a hawkish stance toward Moscow — would draw up a new supply security report taking into account recent developments.

"The certification cannot take place now," he tweeted later, signaling that while Berlin was freezing the project, it might get licensed at a later date. Full cancellation of the pipeline could leave the government vulnerable to lawsuits.

A spokesman for U.K. Prime Minister Boris Johnson also welcomed the move. "It's certainly it's something we've said both in conversations and publicly repeatedly. Being dependent on Russian hydrocarbons in this way is not beneficial to Europe."

The decision comes as Europeans grapple with record-high power bills, driven in large part by a gas supply shortage. The Continent is heavily dependent on Russian gas, which accounted for more than 42 percent of EU imports via pipelines alone last year.

Former Russian President Dmitry Medvedev, now deputy chair of Russia’s security council, reacted to Scholz’s decision by pointing out the EU’s dependency: “Welcome to the brave new world where Europeans are very soon going to pay €2.000 for 1.000 cubic meters of natural gas!” 

Prior to Scholz's announcement, Putin had said that he has no intention of slashing exports to Europe.

A Nord Stream 2 spokesperson declined to comment.

Laurenz Gehrke, Esther Webber and America Hernandez contributed reporting.