THE SHELL LEAKS FILES — 26 OCTOBER 2026
SLF-2007-099
The Sakhalin Papers LXXXIX: The Certificate That Never Came — How US Sanctions Forced DNV GL Out of Nord Stream 2
On 4 January 2021, one of the world’s leading independent technical assurance companies announced that it was withdrawing from Nord Stream 2. Norway-based DNV GL had been engaged to verify the pipeline’s safety and technical integrity. New American sanctions legislation meant it could no longer complete that work or issue the intended certificate. Yet a subsequent Danish government announcement reveals an important qualification: by October 2021, one of the pipeline’s two lines had satisfied Denmark’s certification-related conditions. The authenticated corporate disclosures, US legislation, Danish regulatory records and German judicial proceedings reveal how Nord Stream 2 encountered successive obstacles even after physical construction was completed.
Archive reference: SLF-2007-099
Publication date: 26 October 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-098, The Sakhalin Papers LXXXVIII, 25 October 2026
Principal sources: DNV GL’s statements reported by S&P Global and EUobserver on 4–5 January 2021; the US National Defense Authorization Act enacted on 1 January 2021; Danish Energy Agency decisions dated 30 October 2019, 1 October 2020 and 4 October 2021; Nord Stream 2’s construction records; the Düsseldorf Higher Regional Court’s decision of 25 August 2021; German Federal Network Agency records; Shell’s authenticated April 2017 financing announcement; and Shell’s financial disclosures filed with the US Securities and Exchange Commission.
Evidence classification: Authenticated corporate and government records, contemporaneously reported company statements, statutory provisions, judicial findings, contemporary journalism and separately identified editorial commentary.
INTRODUCTION: A PIPELINE WITHOUT ITS EXPECTED CERTIFIER
On Monday, 4 January 2021, DNV GL confirmed that it was withdrawing from verification work associated with Nord Stream 2.
The Norwegian company was internationally recognised for technical assurance, inspection, verification and certification services.
Its work involved determining whether complex industrial infrastructure met applicable technical and safety standards.
Nord Stream 2 AG had engaged DNV GL to verify the integrity of the pipeline system.
The arrangement was not merely a voluntary public-relations exercise.
Technical verification formed part of the conditions under which the pipeline could be commissioned and operated.
The company had been working on the project for approximately five years.
Now it was withdrawing.
A DNV GL spokesman told S&P Global Platts that the company would end verification activities while the relevant sanctions remained in force.
The statement included an especially consequential conclusion.
“DNV GL cannot issue a certificate upon the completion of the pipeline.”
That was the company’s position on 4 January 2021.
The announcement followed the enactment of new American legislation expanding sanctions against businesses supporting Nord Stream 2.
Washington had already targeted construction vessels and certain associated services.
The latest provisions extended the potential sanctions consequences to companies providing testing, inspection and certification activities.
For Nord Stream 2, this created another obstacle.
The project required more than the physical installation of pipes.
It needed technical verification.
It needed compliance with the conditions imposed by national regulators.
And it needed approval of the company that would operate the pipeline within the European gas market.
These were different requirements, administered under different legal arrangements.
The DNV GL withdrawal concerned technical verification.
It did not automatically resolve or determine the separate question of whether Germany would eventually certify Nord Stream 2 AG as a transmission-system operator.
Nor did it establish that the pipeline was physically unsafe.
The company was withdrawing because of sanctions exposure, not announcing that its inspections had discovered a dangerous defect.
That distinction is fundamental.
There is also an important development that emerged later in 2021.
On 4 October, Denmark’s energy regulator announced that the certification-related conditions for one of Nord Stream 2’s two pipeline lines had been satisfied.
The Danish decision demonstrates that the January withdrawal did not permanently prevent every form of technical or regulatory approval.
Nevertheless, the expected DNV GL certificate had become unavailable under the circumstances identified in January.
For Shell, which had helped finance the project, the withdrawal added another complication to an investment whose commercial success depended upon the pipeline becoming operational.
The documents permit us to reconstruct how that complication arose, what it meant and what subsequent events reveal about its actual consequences.
Contemporaneous source: S&P Global — Norway-Based DNV GL Halts Nord Stream 2 Certification Work, 4 January 2021. EUobserver
1. THE ORIGINAL SHELL DOCUMENT: APRIL 2017
The appropriate starting point for Shell’s financial involvement remains 24 April 2017.
On that date, Royal Dutch Shell announced that it had signed a financing agreement with Nord Stream 2 AG.
Four other European energy companies participated:
ENGIE, OMV, Uniper and Wintershall.
Each company committed to provide financing and guarantees covering up to approximately 10% of the project’s estimated €9.5 billion cost.
Shell’s maximum indicated commitment was therefore approximately €950 million.
The agreement included a €285 million long-term funding facility and up to €665 million in additional financing and guarantees.
Gazprom remained the sole shareholder of Nord Stream 2 AG.
This distinction has been important throughout the recent instalments.
Shell was a financier.
It did not acquire a 10% ownership interest in the project company under the April 2017 arrangement.
The company nevertheless had a substantial financial interest in Nord Stream 2’s successful completion.
If the project could not operate commercially, the recoverability of the financing could become uncertain.
That exposure did not require Shell to control the construction vessels, certification companies or national regulatory decisions.
It arose from the financing relationship itself.
The April 2017 announcement also provides a revealing example of the expectations surrounding the project.
Nord Stream 2 was intended to provide a direct connection between Russian gas reserves and European consumers.
The planned capacity was approximately 55 billion cubic metres of natural gas annually.
The participating companies regarded the project as commercially important for Europe’s future gas supplies.
Those expectations were genuine components of the investment rationale.
They were not guarantees that the project would eventually operate.
Authenticated corporate evidence: Shell’s original announcement appears on page 40 of its official 2017 corporate press release compilation. Shell
2. WHAT WAS DNV GL?
DNV GL was a Norway-based international assurance and risk-management organisation.
Its name reflected the combination of Det Norske Veritas and Germanischer Lloyd.
The organisation provided technical expertise across shipping, offshore energy, industrial infrastructure and other sectors.
Its responsibilities could include independent assessment of whether equipment and systems complied with specified engineering standards.
Such work matters particularly for subsea pipelines.
A pipeline extending more than 1,200 kilometres beneath the Baltic Sea presents complex engineering requirements.
Those include pipe integrity, welding, installation, pressure testing, environmental conditions and the ability to operate safely over an extended period.
Independent verification provides evidence that relevant requirements have been satisfied.
It does not guarantee that infrastructure can never fail.
Nor does it substitute for every approval required by a national government.
DNV GL had been engaged to verify the safety and technical integrity of Nord Stream 2.
The company expected to issue a certificate of compliance after satisfactory completion of the relevant work.
The technical standard identified in its contemporary statements was DNVGL-OS-F101, concerning submarine pipeline systems.
The precise significance of the arrangement lay in the independent assessment.
Nord Stream 2 AG could construct the pipeline.
Its contractors could install the pipes.
But technical verification provided an additional layer of assurance for regulators and other interested parties.
On 13 January 2021, DNV GL separately announced that it would simplify its corporate name to DNV from 1 March 2021.
That corporate announcement confirms the company’s identity and the timing of its name change.
Throughout this instalment, the name DNV GL is retained when discussing the January withdrawal because that was the name used at the time.
Corporate source: DNV — Corporate Name Change Announcement, 13 January 2021.
3. DENMARK’S 2019 CONSTRUCTION PERMIT
The Danish Energy Agency provides an essential primary source.
On 30 October 2019, the agency granted Nord Stream 2 AG permission to construct a section of the pipeline on the Danish continental shelf.
The approved route ran southeast of Bornholm in the Baltic Sea.
The permission followed a lengthy process involving alternative proposed routes.
The Danish regulator examined environmental and safety considerations before approving the final route.
The agency explained that Denmark’s obligations under the United Nations Convention on the Law of the Sea were relevant to its assessment.
Those obligations did not remove the need to consider environmental and safety conditions.
The resulting construction permit established requirements that the project company needed to satisfy.
According to DNV GL’s January 2021 statement reported by S&P Global, the Danish construction arrangements identified DNV GL as the company expected to issue a certificate of conformity.
This was why the withdrawal had particular significance.
The certification company was not simply a consultant offering optional advice.
Its verification function was connected with the project’s regulatory arrangements.
A change in certifying organisation could therefore require consideration by the Danish authorities.
However, it would be incorrect to conclude from the 2019 permit alone that Denmark could never accept another means of meeting its verification requirements.
That question depended upon the applicable permit conditions and subsequent regulatory decisions.
The events of October 2021 would demonstrate why that qualification matters.
Official regulatory source: Danish Energy Agency — Nord Stream 2 Construction Permit, 30 October 2019. S&P Global
4. OCTOBER 2020: DENMARK GRANTS CONDITIONAL OPERATING PERMISSION
A second Danish document is equally important.
On 1 October 2020, the Danish Energy Agency announced that it had granted Nord Stream 2 AG an operations permit covering the relevant section of the pipeline.
But the permit was conditional.
The agency explained that commissioning could occur only after the relevant pipeline had been tested and verified and the applicable permit conditions had been satisfied.
This distinction is central to the story.
An operating permit granted subject to conditions is not necessarily equivalent to immediate permission to begin commercial operations.
Before commissioning, the project needed to demonstrate compliance.
At least one of the two pipeline lines had to meet the required technical and regulatory conditions.
In other words, the Danish authorities had established a framework under which the infrastructure could ultimately operate.
They had not removed the need for technical verification.
When DNV GL withdrew three months later, it created uncertainty over one of the mechanisms intended to demonstrate that the conditions had been met.
The original Danish government statement establishes the regulatory position before the January 2021 sanctions developments.
It therefore provides an independent reference point against which the subsequent withdrawal can be assessed.
The requirement for verification existed before DNV GL announced its departure.
It was not invented after the American sanctions changed.
Official document: Danish Energy Agency — Permit for Operation of Nord Stream 2, 1 October 2020.
5. DECEMBER 2020: WASHINGTON TARGETS THE SUPPORTING INFRASTRUCTURE
The American sanctions campaign had already disrupted construction.
In December 2019, Allseas suspended its offshore pipe-laying activities.
Nord Stream 2 subsequently attempted to complete the remaining sections using alternative vessels.
American lawmakers responded by seeking to expand sanctions beyond the original focus on ships.
The additional measures addressed companies supplying services necessary for construction and completion.
By December 2020, Congress had agreed legislative language intended to broaden the restrictions.
Among the activities addressed were particular testing, inspection and certification services.
This represented a significant development.
The successful construction of an international pipeline depends upon a network of specialist companies.
The pipe-laying contractor is only one participant.
Other companies may provide technical testing, inspection, verification, engineering assurance, insurance and certification.
These services may be necessary before commercial operations can begin.
The amended legislation sought to extend American sanctions exposure to additional categories within that network.
For DNV GL, the new language was directly relevant.
Its role was technical verification.
The company’s work was therefore much closer to the newly specified certification activities than Shell’s general project-financing arrangement.
The distinction should not be lost.
American sanctions provisions could affect different participants in the same project through different legal mechanisms.
A certification company was not necessarily in the same position as a lender.
And a lender was not automatically responsible for the activities of the certification company.
6. 1 JANUARY 2021: THE LAW CHANGES
The legislative development became effective at the beginning of 2021.
On 1 January 2021, the National Defense Authorization Act for Fiscal Year 2021 became law.
Congress enacted it by overriding President Donald Trump’s veto.
Section 1242 expanded the sanctions framework established under the Protecting Europe’s Energy Security Act of 2019.
The amendments are commonly associated with the Protecting Europe’s Energy Security Clarification Act.
The legislation addressed additional categories of commercial support for Nord Stream 2 and TurkStream.
These included certain activities involving insurance and reinsurance.
They also included particular technical services and equipment associated with the construction vessels.
Of special relevance to DNV GL, the amended framework covered specified testing, inspection and certification services necessary or essential for completing or operating the pipeline.
The distinction between the earlier and amended legislation matters.
The original PEESA provisions concentrated heavily on vessels used for pipe-laying.
The January amendments brought additional services more expressly within the sanctions framework.
The legislation contained reporting and identification mechanisms.
It also provided for exceptions, waivers and qualifying wind-down arrangements.
The existence of a potentially sanctionable category did not automatically mean that every company performing a broadly similar service had already been designated for sanctions.
The precise statutory requirements remained relevant.
Nevertheless, the potential consequences were sufficiently serious that DNV GL decided to withdraw.
The decision came almost immediately.
Primary statutory source: Public Law 116-283 — National Defense Authorization Act for Fiscal Year 2021, Section 1242.
Official implementation guidance: US Department of State — PEESA as Amended, 9 April 2021.
7. 4 JANUARY 2021: DNV GL WITHDRAWS
The contemporary record is unusually clear.
On 4 January, S&P Global published a report by Stuart Elliott.
The report was based upon a statement supplied by a DNV GL spokesman.
The company confirmed that it would cease verification activities for the Nord Stream 2 pipeline system while the applicable sanctions remained in force.
It also confirmed that it was implementing a plan to withdraw its verification support.
The central consequence was that DNV GL could not issue the originally contemplated certificate under the circumstances then prevailing.
The statement was independently reported by EUobserver on 5 January.
That report identified the newly enacted American legislation as the reason for the withdrawal.
There is an important evidential distinction concerning the source.
The statement is attributable to DNV GL because contemporaneous journalists reported receiving it directly from the company.
However, the evidence examined for this instalment is the contemporaneously published company statement, rather than a separately retrieved DNV GL press release containing the complete original text.
That distinction does not undermine the substance of the announcement.
It identifies its provenance accurately.
The company did not announce that Nord Stream 2 had failed a technical inspection.
It did not announce that the pipeline was unsafe.
It did not state that a certificate had been refused because of engineering deficiencies.
Its explanation concerned American sanctions.
The withdrawal was therefore a commercial and legal response to the new sanctions environment.
This is the central finding of today’s instalment: a company engaged to provide independent technical verification withdrew because the applicable sanctions exposure had changed.
Contemporaneous evidence: S&P Global, 4 January 2021 — DNV GL Halts Nord Stream 2 Certification Work.
Independent corroboration: EUobserver, 5 January 2021 — US Forces Norwegian Firm to Abandon Nord Stream 2.
8. THE IMMEDIATE QUESTION: COULD ANOTHER COMPANY REPLACE DNV GL?
The withdrawal presented Nord Stream 2 AG with a practical problem.
The project still needed to demonstrate that relevant technical and safety requirements had been met.
Could another recognised certification organisation undertake the work?
Contemporary reporting considered that possibility.
S&P Global explained that the pipeline company could attempt to engage a replacement.
However, the Danish regulatory arrangements identified DNV GL as the expected certifying body.
A change might therefore require approval or modification of the existing arrangements.
The difficulty was not necessarily limited to Denmark.
Nord Stream 2 crossed maritime areas associated with several countries.
Different authorities had issued permissions under their respective legal frameworks.
The applicable verification requirements could vary between jurisdictions.
A replacement certification organisation might therefore need to satisfy more than one regulator.
There was also the sanctions problem itself.
A substitute company might face the same American sanctions exposure that had prompted DNV GL to withdraw.
In an analysis published on 29 January 2021, energy-market specialists at ICIS examined the consequences.
The publication quoted an industry consultant who considered finding a replacement particularly difficult because internationally recognised certification organisations often had commercial interests potentially vulnerable to American sanctions.
That was a contemporary assessment.
It was not a court finding that replacement was legally impossible.
Nor did it establish that no alternative verification arrangements could ever be accepted.
The later Danish decision is especially important because it prevents such a conclusion.
What appeared to be a potentially serious certification obstacle in January did not necessarily remain an insurmountable obstacle throughout 2021.
Contemporary analysis: ICIS — US Sanctions Stall Nord Stream 2, 29 January 2021.
9. SEPTEMBER 2021: THE PIPELINE IS PHYSICALLY COMPLETED
Despite the sanctions and construction difficulties, Nord Stream 2 continued.
On 10 September 2021, the project announced that pipe-laying work had been completed.
The two pipeline lines extended approximately 1,230 kilometres between Russia and Germany.
Their combined planned annual capacity was 55 billion cubic metres.
This was an important engineering milestone.
A project whose construction had been repeatedly interrupted had nevertheless reached physical completion.
But the distinction between construction and commercial operation remained.
A completed pipeline does not automatically possess every authorisation required to transport gas commercially.
Testing and commissioning may remain necessary.
National regulators may require evidence of technical compliance.
And the company operating the infrastructure may require certification under applicable energy-market legislation.
The completion announcement therefore did not resolve every outstanding regulatory issue.
Nor did it establish that DNV GL had returned to the project.
The company’s January statement remained an important part of the historical record.
But another development was approaching.
Denmark was about to announce that at least one of the pipeline’s two lines had satisfied the relevant national conditions.
Contemporaneous evidence: S&P Global — German Regulator Confirms Nord Stream 2 Certification Application, 13 September 2021.
10. THE MOST IMPORTANT QUALIFICATION: DENMARK’S DECISION OF 4 OCTOBER 2021
On 4 October 2021, the Danish Energy Agency published an official announcement.
Its headline stated that Nord Stream 2’s pipeline B could be put into operation.
The agency explained that Nord Stream 2 AG had fulfilled the applicable conditions for that pipeline line.
Crucially, the conditions included those concerning certification.
This is an important qualification to the January 2021 withdrawal story.
DNV GL had announced that it could not issue the originally contemplated certificate while the sanctions remained applicable.
But nine months later, the responsible Danish authority accepted that the certification-related conditions for pipeline B had been satisfied.
The documents establish both events.
They must be considered together.
It would therefore be misleading to claim that DNV GL’s withdrawal permanently prevented Nord Stream 2 from satisfying Denmark’s technical requirements.
The Danish announcement demonstrates otherwise for pipeline B.
However, the announcement does not identify, in the public text examined, the precise subsequent verification arrangements through which the conditions were satisfied.
It does not establish whether an alternative certification organisation completed the work.
It does not identify every technical document accepted by the agency.
And it does not prove that DNV GL itself eventually issued the originally contemplated certificate.
Those questions would require examination of additional regulatory and project records.
The Danish agency also stated that some conditions remained outstanding for pipeline A.
The approval was therefore specific.
It concerned pipeline B.
It was not a declaration that both lines had satisfied every applicable condition.
Most importantly, the Danish decision did not provide the separate German certification required for the pipeline’s operation within the European gas market.
The Danish regulator had accepted the technical and regulatory conditions for one line. Germany still had to decide whether the pipeline operator satisfied its own legal requirements.
That is perhaps the most revealing distinction in this instalment.
It prevents an inaccurate narrative in which DNV GL’s withdrawal is treated as the single, permanent explanation for Nord Stream 2’s failure to enter commercial service.
The subsequent record is more complicated.
Authenticated primary source: Danish Energy Agency — Nord Stream 2 Pipeline B Can Be Put Into Operation, 4 October 2021.
11. TWO DIFFERENT KINDS OF CERTIFICATION
At this stage, the terminology becomes particularly important.
The word certification was being used in different legal and technical contexts.
Technical verification concerned whether the pipeline infrastructure met relevant engineering and safety standards.
This was the work associated with DNV GL and the conditions imposed by the Danish Energy Agency.
Transmission-system operator certification concerned whether the entity responsible for operating the pipeline satisfied the requirements of German and European energy legislation.
That was the responsibility of Germany’s Federal Network Agency, the Bundesnetzagentur.
The two processes were not interchangeable.
A pipeline could satisfy technical conditions within Danish waters without its operator necessarily qualifying for certification under German energy-market law.
Likewise, a regulatory assessment of the pipeline operator would not automatically replace all technical verification requirements.
The distinction explains how Denmark could announce progress in October 2021 while Germany continued examining Nord Stream 2 AG’s application.
It also explains why the withdrawal of a technical certification organisation did not, by itself, settle the separate dispute over ownership, management and regulation of the pipeline.
The project required both physical infrastructure that met the relevant technical conditions and an operator that satisfied the applicable regulatory framework.
One could not automatically substitute for the other.
12. AUGUST 2021: A GERMAN COURT HAD ALREADY REJECTED AN IMPORTANT EXEMPTION
Another judicial decision provides essential context.
On 25 August 2021, the Düsseldorf Higher Regional Court rejected Nord Stream 2 AG’s appeal concerning its eligibility for a derogation from certain European gas-market requirements.
The case reference was VI-3 Kart 211/20 [V].
The dispute concerned the meaning of completion under the amended European Gas Directive.
Nord Stream 2 AG had argued that its investment and development circumstances justified treatment as infrastructure completed before the relevant legislative cutoff date.
The court rejected that interpretation.
It concluded that the pipeline had not been physically completed before 23 May 2019.
The statutory derogation was therefore unavailable under the relevant provision.
This was a judicial finding about European regulatory law.
It was not a judgment concerning DNV GL’s withdrawal.
It did not determine whether the company had correctly assessed American sanctions.
Nor did it decide whether the pipeline was technically safe.
The court’s conclusion established that the pipeline remained subject to the applicable German regulatory framework.
That meant the subsequent transmission-system operator certification process retained its importance.
The judgment therefore demonstrates that Nord Stream 2 faced separate legal obstacles even as construction approached completion.
Judicial record: Düsseldorf Higher Regional Court — Decision of 25 August 2021, Case VI-3 Kart 211/20.
Contemporary court reporting: S&P Global — German Court Rejects Nord Stream 2 Derogation Appeal.
13. NOVEMBER 2021: GERMANY SUSPENDS OPERATOR CERTIFICATION
The next major development occurred on 16 November 2021.
Germany’s Federal Network Agency announced that it had suspended the procedure to certify Nord Stream 2 AG as an independent transmission-system operator.
The reason was not DNV GL’s withdrawal.
The German regulator identified a separate legal problem.
Nord Stream 2 AG was based in Zug, Switzerland.
The regulator concluded that certification of the operator required an appropriate legal structure under German law.
Nord Stream 2 AG proposed establishing a German subsidiary to own and operate the German section of the pipeline.
The subsidiary would need to satisfy the relevant requirements of Germany’s Energy Industry Act.
The regulator also required the transfer of essential assets and human resources.
The certification process would remain suspended until the necessary arrangements had been completed and the documentation could be examined.
This was an official administrative decision.
It did not establish that the pipeline was technically defective.
It did not establish that DNV GL’s withdrawal had made certification impossible.
It concerned the legal organisation of the company seeking permission to operate the infrastructure.
The decision therefore provides a second major qualification to the January 2021 story.
By November, the pipeline’s regulatory difficulties were not confined to the absence of DNV GL’s expected certificate.
The operator itself had not satisfied the legal conditions required for German certification.
The Bundesnetzagentur explained that, once the necessary requirements had been met, it could resume its examination and transmit a draft decision to the European Commission.
The process had not resulted in final approval.
Authenticated primary source: Bundesnetzagentur — Certification Procedure for Nord Stream 2 Suspended, 16 November 2021.
14. FEBRUARY 2022: THE GERMAN GOVERNMENT HALTS THE PROCESS
The next decisive development came on 22 February 2022.
Following Russia’s recognition of the separatist-controlled regions of eastern Ukraine, the German government halted the Nord Stream 2 certification process.
Germany’s Federal Ministry for Economic Affairs and Climate Action withdrew an earlier assessment concerning the project’s implications for security of supply.
The ministry explained that the deteriorating geopolitical situation required a reassessment.
Without the necessary security-of-supply assessment, Germany’s Federal Network Agency could not issue a favourable certification decision.
The ministry’s announcement was explicit.
The decision concerned changing geopolitical circumstances.
It was not presented as a finding that DNV GL had discovered a technical defect.
Nor was it simply a continuation of the January 2021 certification-company withdrawal.
It involved the German government’s assessment of the implications of operating a major Russian gas pipeline.
Two days later, on 24 February, Russia launched its full-scale invasion of Ukraine.
That invasion fundamentally transformed the commercial and political environment surrounding Nord Stream 2.
The project had already experienced years of legal, regulatory and sanctions difficulties.
The events of February 2022 introduced a much more severe crisis.
The final failure to commence commercial operations therefore cannot responsibly be attributed to DNV GL’s withdrawal alone.
German government record: Federal Ministry for Economic Affairs — Discontinuation of Nord Stream 2 Certification, 22 February 2022.
15. SHELL’S $1.126 BILLION WRITE-DOWN
Shell’s financial disclosures provide the final established connection to the company’s shareholders.
In its fourth-quarter and full-year 2022 results, published on 2 February 2023, Shell confirmed that its final Nord Stream 2 loan instalments had been made during the second quarter of 2020.
That was before DNV GL withdrew.
It was also before the American legislation expanding sanctions to specified certification activities became law.
Following its announcements concerning withdrawal from Russian ventures in the first quarter of 2022, Shell reassessed the recoverability of the Nord Stream 2 loan.
The result was a complete write-down.
The amount was $1.126 billion.
The company’s SEC-filed financial statements establish that figure directly.
The impairment should not be confused with a fine or sanctions penalty.
It represented the accounting consequence of reassessing the loan’s recoverable value.
The public documents do not establish that DNV GL’s withdrawal caused the impairment.
Nor do they establish that Shell controlled DNV GL’s decisions.
The relationship is more limited.
Shell had provided substantial financing for a project that needed to satisfy technical, regulatory and commercial conditions before it could operate.
The withdrawal of an important certification organisation was one development affecting the project’s prospects.
The later Danish approval demonstrates that the technical verification problem did not remain wholly unresolved in its original form.
The German regulatory proceedings and the events of February 2022 then introduced or confirmed other major obstacles.
The eventual financial loss arose within this wider sequence of developments.
A fair historical account must resist the temptation to assign the entire loss to one earlier event.
Primary Shell evidence: Shell — SEC Form 6-K, Fourth Quarter 2022 Financial Results.
DOCUMENTARY FINDINGS
ESTABLISHED FACTS
Shell signed its Nord Stream 2 financing agreement on 24 April 2017.
Shell was one of five European financing companies.
Gazprom remained the sole shareholder of Nord Stream 2 AG.
DNV GL had been engaged to verify the safety and technical integrity of the pipeline.
Denmark granted a construction permit for Nord Stream 2 on 30 October 2019.
On 1 October 2020, Denmark granted an operations permit subject to conditions, including relevant testing and verification requirements.
On 1 January 2021, American legislation expanded the sanctions framework affecting Nord Stream 2.
The amendments covered specified testing, inspection and certification services.
On 4 January 2021, DNV GL confirmed that it would withdraw from verification activities because of the sanctions environment.
The company stated that it could not issue the originally contemplated certificate under the circumstances then prevailing.
Nord Stream 2 nevertheless continued construction.
Physical pipe-laying was completed in September 2021.
On 4 October 2021, the Danish Energy Agency announced that pipeline B had satisfied the applicable conditions, including those concerning certification.
The Danish decision did not establish that every condition for pipeline A had been met.
On 25 August 2021, the Düsseldorf Higher Regional Court had rejected Nord Stream 2 AG’s appeal seeking a regulatory derogation.
On 16 November 2021, Germany’s Federal Network Agency suspended certification of Nord Stream 2 AG as an independent transmission-system operator because the proposed operating arrangements did not yet satisfy the relevant German legal requirements.
On 22 February 2022, Germany halted the certification process following changes in the geopolitical situation and withdrawal of the previous security-of-supply assessment.
Shell recorded a full $1.126 billion write-down of its Nord Stream 2 loan in the first quarter of 2022.
CONTEMPORANEOUS POSITIONS AND INTERPRETATIONS
DNV GL explained its January 2021 withdrawal by reference to American sanctions.
The company’s statement did not identify engineering defects as the reason.
American authorities maintained that Nord Stream 2 threatened European energy security and increased Russian geopolitical influence.
Supporters of Nord Stream 2 argued that the pipeline would provide additional gas transportation capacity and support European energy supplies.
The Düsseldorf court addressed the project’s eligibility for a regulatory derogation.
The Danish Energy Agency separately assessed the applicable technical and operational permit conditions.
Germany’s Federal Network Agency examined whether the proposed transmission-system operator satisfied German energy legislation.
These authorities were performing different functions.
Their decisions should not be treated as interchangeable.
MATTERS NOT ESTABLISHED
The examined evidence does not establish that DNV GL withdrew because it had discovered serious defects in Nord Stream 2.
It does not establish that DNV GL was itself designated for American sanctions.
It does not establish that Shell instructed or influenced DNV GL’s withdrawal.
It does not establish that Shell breached American sanctions legislation.
It does not identify the precise verification arrangements accepted by Denmark in October 2021.
It does not establish that DNV GL subsequently issued the originally contemplated certificate.
It does not establish that the January 2021 withdrawal permanently prevented all technical verification of the pipeline.
It does not establish that Denmark’s approval of pipeline B amounted to German authorisation for commercial gas transportation.
It does not establish that DNV GL’s withdrawal caused the German regulator’s November 2021 suspension.
And it does not establish that the company’s withdrawal independently caused Shell’s $1.126 billion write-down.
These limitations are essential to the integrity of the documentary record.
EDITORIAL COMMENTARY: THE DIFFERENCE BETWEEN BUILDING A PIPELINE AND MAKING IT LEGALLY OPERABLE
The DNV GL episode illustrates an often overlooked aspect of large infrastructure investment.
Construction is only one stage of a project’s development.
A technically complex installation may require independent verification before it can be commissioned.
National authorities may impose additional conditions.
The operating company may require regulatory authorisation.
And the commercial environment must remain sufficiently stable for the investment to generate revenue.
Nord Stream 2 encountered difficulties at every stage.
American sanctions disrupted construction.
Russia sought alternative vessels.
Washington expanded the sanctions framework to cover additional supporting services.
DNV GL withdrew from technical verification.
Construction nevertheless continued.
Denmark subsequently accepted that the conditions concerning one pipeline line had been satisfied.
Germany then suspended certification of the proposed operator for separate regulatory reasons.
Finally, the geopolitical crisis of February 2022 transformed the entire project’s prospects.
This is a much more complicated history than the suggestion that an American sanctions measure simply prevented a pipeline from receiving a certificate.
The January 2021 withdrawal was real.
It represented a substantial disruption.
But the subsequent Danish government announcement demonstrates that its consequences should not be exaggerated.
The historical record does not justify claiming that DNV GL’s departure permanently prevented every certification-related requirement from being satisfied.
Nor does it establish that the engineering integrity of the pipeline had been called into question by the company.
Indeed, the reason given for withdrawal was the sanctions environment.
That distinction is important.
A technical assurance organisation may withdraw from a project for commercial or legal reasons without making an adverse finding about the safety of the infrastructure.
Equally, a government may accept that technical conditions have been satisfied without granting every approval required for commercial operations.
The distinction between technical conformity and operator certification is especially revealing.
Denmark’s October 2021 decision concerned conditions applicable to the pipeline within its jurisdiction.
Germany’s November 2021 decision concerned the legal structure and regulatory obligations of the proposed operator.
These were different questions.
Their answers were reached by different authorities.
One positive decision did not automatically resolve the other.
For Shell shareholders, the broader lesson concerns the extended nature of investment risk.
A company financing major infrastructure may have limited control over the independent contractors, certification organisations and regulators whose decisions affect the project’s eventual commercial viability.
That does not remove management’s responsibility to assess the investment.
But it does mean that the historical evaluation of its decisions must consider the circumstances and information available at the relevant times.
Shell’s April 2017 financing agreement was made years before the January 2021 sanctions amendments.
Its final loan instalments were completed before DNV GL withdrew.
The eventual write-down followed the fundamentally altered circumstances of 2022.
The available evidence does not establish that Shell could have avoided the entire loss merely by anticipating the withdrawal of a particular certification company.
Nor does the financial loss establish that its directors acted improperly.
What the documentary record does establish is the increasing complexity of the project’s development.
Nord Stream 2 was not brought to a halt by one isolated event.
It experienced a succession of legal, political, technical and commercial difficulties.
Some were overcome.
Others remained unresolved.
And the final geopolitical crisis rendered the original commercial expectations untenable.
This is why the October 2021 Danish document is especially valuable.
It complicates a seemingly straightforward story.
The expected certification company had withdrawn.
Yet a national regulator subsequently accepted that relevant certification conditions had been satisfied for one of the two pipeline lines.
The most important function of an independent archive is not to preserve the simplest interpretation of events. It is to preserve the documents that allow that interpretation to be challenged.
In this case, the original January statement and the subsequent October regulatory decision must both remain part of the historical record.
Taken together, they provide a more accurate account of what happened.
And they remind us that the absence of one anticipated certificate does not necessarily explain the ultimate failure of an entire international infrastructure project.
SOURCE RECORD AND DOCUMENTARY PROVENANCE
The following records form the principal evidential foundation for this instalment. Original company filings, statutory provisions and government documents are prioritised.
1. Royal Dutch Shell plc — 24 April 2017
Shell and Four European Energy Companies Sign Financing Agreements with Nord Stream 2 AG.
Original corporate announcement establishing Shell’s financing commitment, the participation of four other European companies and Gazprom’s sole ownership of Nord Stream 2 AG.
The announcement appears on page 40 of Shell’s official 2017 press release compilation.
Shell — Original 2017 Financing Announcement
2. Danish Energy Agency — 30 October 2019
Permit for the Nord Stream 2 Project Granted by the Danish Energy Agency.
Official record of Denmark’s decision permitting construction on the Danish continental shelf southeast of Bornholm.
Danish Energy Agency — Construction Permit, 30 October 2019
3. Danish Energy Agency — 1 October 2020
Permit for Operation of the Nord Stream 2 Project.
Authenticated government statement establishing that operations permission was conditional upon applicable testing, verification and regulatory requirements being satisfied.
Danish Energy Agency — Operations Permit, 1 October 2020
4. United States Congress — 1 January 2021
National Defense Authorization Act for Fiscal Year 2021, Section 1242.
Enacted legislation expanding sanctions concerning Nord Stream 2 and TurkStream, including specified testing, inspection and certification activities.
Public Law 116-283 — Official Statutory Text
5. S&P Global — 4 January 2021
Norway-Based DNV GL Halts Nord Stream 2 Certification Work on US Sanctions.
Contemporaneous report by Stuart Elliott containing DNV GL’s directly attributed statement confirming the withdrawal of verification services.
This is the principal contemporaneous source for the company’s January decision.
S&P Global — DNV GL Withdrawal Announcement
6. EUobserver — 5 January 2021
US Forces Norwegian Firm to Abandon Nord Stream 2.
Independent contemporary reporting by Andrew Rettman, corroborating the company’s explanation and identifying the new American legislation.
EUobserver — DNV GL Withdrawal, 5 January 2021
7. DNV GL — 13 January 2021
DNV GL Changes Name to DNV.
Authenticated corporate announcement confirming the organisation’s identity and the planned change of name effective 1 March 2021.
DNV — Corporate Announcement, 13 January 2021
8. ICIS — 29 January 2021
US Sanctions Stall Nord Stream 2, Clashing Transatlantic Political and Commercial Interests.
Contemporary analysis of the practical consequences of DNV GL’s withdrawal and the difficulties potentially involved in replacing the certification organisation.
ICIS — Nord Stream 2 Certification Analysis
9. Düsseldorf Higher Regional Court — 25 August 2021
Case VI-3 Kart 211/20 [V].
Judicial decision rejecting Nord Stream 2 AG’s appeal concerning its eligibility for a derogation from European gas-market regulation.
The proceedings concerned the pipeline’s regulatory status, not the legality of DNV GL’s withdrawal.
German Court Decision — Nord Stream 2 Regulatory Derogation
10. Danish Energy Agency — 4 October 2021
Nord Stream 2 — Pipeline B Can Be Put Into Operation.
An especially important authenticated document confirming that the relevant conditions, including those concerning certification, had been met for pipeline B.
This document qualifies the suggestion that DNV GL’s withdrawal permanently prevented technical approval.
Danish Energy Agency — Pipeline B Approval, 4 October 2021
11. Bundesnetzagentur — 16 November 2021
Certification Procedure for Nord Stream 2 Suspended.
Official decision explaining Germany’s suspension of the transmission-system operator certification procedure because the proposed operator did not yet satisfy the necessary German legal requirements.
German Federal Network Agency — 16 November 2021 Decision
12. German Federal Ministry for Economic Affairs — 22 February 2022
Discontinuation of the Certification Procedure for Nord Stream 2.
Official announcement explaining the withdrawal of the previous security-of-supply assessment and the effect upon the German regulatory process.
German Government — Nord Stream 2 Certification Halt
13. Shell plc — 2 February 2023
Fourth Quarter 2022 and Full-Year Results, SEC Form 6-K.
Authenticated Shell filing confirming that final Nord Stream 2 loan instalments were made during the second quarter of 2020 and that the company recognised a full $1.126 billion write-down during the first quarter of 2022.
Shell — SEC-Filed Financial Disclosure
DOCUMENTARY DISCLAIMER
This instalment distinguishes authenticated corporate disclosures, official government records, statutory provisions, judicial findings and contemporaneously reported company statements from interpretation and editorial commentary.
DNV GL’s withdrawal from Nord Stream 2 verification activities was attributed by the company to the applicable American sanctions environment. The withdrawal is not evidence that DNV GL had found the pipeline unsafe or technically defective.
The January 2021 statement is documented through contemporaneous reporting that directly attributed the announcement to DNV GL.
The Danish Energy Agency’s announcement of 4 October 2021 confirms that the relevant conditions, including those concerning certification, were satisfied for pipeline B. The public announcement examined does not identify every technical document or organisation involved in satisfying those conditions.
The Danish technical and regulatory decisions are distinguished from the separate German process for certifying Nord Stream 2 AG as a transmission-system operator.
The Düsseldorf Higher Regional Court decision concerned European gas-market regulation and did not determine whether DNV GL had acted lawfully under American sanctions legislation.
No allegation is made that Shell directed the withdrawal of DNV GL, breached sanctions legislation, concealed material information or deliberately disregarded its obligations to shareholders.
The article does not establish that DNV GL’s withdrawal directly caused Shell’s eventual $1.126 billion write-down.
Additional authenticated records, factual corrections and responses from Shell, DNV and other relevant parties remain welcome.
The website’s general disclaimer also applies.
NEXT IN THE SHELL LEAKS FILES
SLF-2007-100 — The Sakhalin Papers XC: Built but Not Approved — Germany’s November 2021 Decision and the Last Regulatory Barrier to Nord Stream 2
The next instalment will examine the German certification dispute in greater detail.
By September 2021, Nord Stream 2’s physical construction had been completed.
By October, Denmark had accepted that the relevant conditions for pipeline B had been satisfied.
Yet commercial gas transportation through the completed pipeline remained unavailable.
The problem was no longer simply construction.
It was the legal status of the company seeking permission to operate the infrastructure.
On 16 November 2021, Germany’s Federal Network Agency suspended the certification of Nord Stream 2 AG as an independent transmission-system operator.
The regulator concluded that the necessary operating arrangements required a company organised under German law.
Nord Stream 2 AG, based in Switzerland, proposed establishing a German subsidiary.
That subsidiary would need to receive essential assets and personnel and satisfy the relevant German energy-market requirements.
The next investigation will examine the regulator’s original decision, the applicable provisions of Germany’s Energy Industry Act, the involvement of the European Commission and the participation of companies opposing the certification application.
It will also investigate the significance of an earlier German government assessment that the pipeline did not endanger security of supply.
That assessment became particularly important in February 2022.
Because the certification process was about to encounter a geopolitical crisis that would transform its prospects.
The questions are substantial.
Why was a German subsidiary required?
What did European energy-market rules demand?
Could the operator satisfy those requirements?
What role did Poland and Ukraine play in the regulatory proceedings?
And how did the German government’s assessment change between October 2021 and February 2022?
The next instalment will examine these questions through official regulatory documents, judicial records and contemporary reporting.
The pipeline had been built.
One line had satisfied Denmark’s certification-related conditions.
But the German regulator had not certified its operator.
The Sakhalin Papers continue.
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