THE SHELL LEAKS FILES — 27 OCTOBER 2026
SLF-2007-100
The Sakhalin Papers XC: Built but Not Approved — Germany’s November 2021 Decision and the Regulatory Battle Over Nord Stream 2
On 26 October 2021, Germany’s Federal Ministry for Economic Affairs concluded that certifying Nord Stream 2 would not endanger German or European gas supplies. Just three weeks later, Germany’s energy regulator suspended certification of the pipeline’s operator. The original government records reveal that these were not contradictory decisions: they concerned different legal requirements. Meanwhile, Polish and Ukrainian energy companies had been admitted to the proceedings, raising objections to Gazprom’s control of the project. The documentary trail shows how a completed pipeline, backed by almost €9.5 billion in planned investment, remained unable to begin commercial operations — and how Shell’s substantial financing ultimately became a $1.126 billion write-down.
Archive reference: SLF-2007-100
Publication date: 27 October 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-099, The Sakhalin Papers LXXXIX, 26 October 2026
Principal sources: German Federal Network Agency certification proceedings, Case BK7-21-056; German Federal Ministry for Economic Affairs security-of-supply assessment dated 26 October 2021; original German regulatory announcement of 16 November 2021; Polish PGNiG and Ukrainian Naftogaz corporate statements; contemporaneous Reuters reporting; German Energy Industry Act; Düsseldorf Higher Regional Court proceedings; European General Court judgment of 27 November 2024; and Shell’s authenticated financial disclosures filed with the US Securities and Exchange Commission.
Evidence classification: Authenticated regulatory and government records, official corporate statements, statutory provisions, judicial findings, contemporaneous journalism and separately identified editorial commentary.
INTRODUCTION: THE PIPELINE WAS FINISHED. THE PERMISSION WAS NOT.
By September 2021, Nord Stream 2 had achieved something that had appeared increasingly uncertain during the preceding two years.
Its physical construction was complete.
The twin pipelines extended approximately 1,230 kilometres beneath the Baltic Sea, connecting Russian gas infrastructure with Germany.
Their combined planned annual capacity was 55 billion cubic metres.
Construction had been repeatedly interrupted by American sanctions, regulatory disputes and difficulties involving specialist contractors.
Yet the remaining pipe-laying work had been completed.
For Gazprom and the European companies financing the project, this was a significant milestone.
But completion of the physical infrastructure was not the same as authorisation to operate it.
Nord Stream 2 AG, the Swiss company responsible for the project, still required certification under German and European gas-market legislation.
That certification was being examined by Germany’s Federal Network Agency, the Bundesnetzagentur.
The proceedings involved questions that were quite different from those concerning the safety of the underwater pipelines.
Who could legally operate the infrastructure?
Could an operator controlled by Gazprom satisfy European requirements concerning independence from gas production and supply?
Would other gas suppliers receive the access required by law?
And could certification affect the security of gas supplies to Germany and the wider European Union?
These were not questions that could be answered merely by demonstrating that the pipes had been laid successfully.
They concerned the organisation and regulation of the company operating the pipeline.
On 26 October 2021, Germany’s Federal Ministry for Economic Affairs issued an important assessment.
It concluded that certification would not endanger German or European gas security.
The conclusion appeared favourable to the project.
But it did not amount to final regulatory approval.
Then, on 16 November, the Bundesnetzagentur suspended the certification proceedings.
The stated reason was the legal organisation of the proposed operator.
Nord Stream 2 AG was incorporated in Switzerland.
The German regulator concluded that the relevant operator needed to be organised under German law.
The project company therefore proposed establishing a German subsidiary responsible for the German section of the pipeline.
Assets and personnel would have to be transferred.
The new company would need to demonstrate compliance with the relevant statutory requirements.
Only then could the certification examination resume.
There is a particularly revealing detail in the official records.
Just one day before the suspension, on 15 November 2021, the German regulator had formally admitted two Ukrainian energy companies to the proceedings.
Two Polish companies had already been admitted in September.
The regulatory process had therefore become a forum in which competing commercial, legal and national energy-security interests could be presented.
And the German government itself had recently reached a favourable conclusion on one of the most politically sensitive issues.
The documents reveal a complicated sequence.
The pipeline was finished.
Germany’s economy ministry had issued a favourable security assessment.
Polish and Ukrainian interests were formally participating in the certification proceedings.
But the regulator had not approved the operator.
The distinction is fundamental to understanding what happened next.
Primary German records: Bundesnetzagentur — Certification Proceedings BK7-21-056 and Bundesnetzagentur — Certification Procedure Suspended, 16 November 2021. Federal Network Agency
1. THE ORIGINAL SHELL FINANCING AGREEMENT
Shell’s involvement began years before the final German certification dispute.
On 24 April 2017, Royal Dutch Shell announced that it had signed financing agreements with Nord Stream 2 AG.
Four other European energy companies participated:
ENGIE, OMV, Uniper and Wintershall.
Each agreed to provide financing and guarantees covering up to approximately 10% of the project’s estimated €9.5 billion cost.
That represented a maximum indicated commitment of approximately €950 million per company.
Gazprom remained the sole shareholder of Nord Stream 2 AG.
This distinction is essential.
Shell did not acquire a 10% equity interest in the pipeline company under the April 2017 financing arrangement.
Its participation was principally that of a lender.
The arrangement nevertheless created substantial financial exposure to the project’s commercial prospects.
The pipeline needed to be completed, satisfy the relevant regulatory requirements and become capable of operating commercially.
If those expectations were not fulfilled, recovery of the financing could become uncertain.
Shell’s subsequent SEC filings establish that its final Nord Stream 2 loan instalments were made during the second quarter of 2020.
That was more than a year before the German certification proceedings reached their critical stage.
It was also before the physical pipeline had been completed.
Thus, by the autumn of 2021, Shell had already advanced the funding disclosed in its subsequent financial statements.
The company was financially exposed to the outcome of a regulatory process conducted by German authorities.
But the public documents do not establish that Shell controlled the applicant, Nord Stream 2 AG, or directed the German certification proceedings.
The project company was Gazprom-owned. Shell was one of its European financiers.
That relationship should not be confused with the different ownership arrangements associated with the original Nord Stream pipeline.
Authenticated Shell record: Shell — Official Corporate Press Release Archive, 2017. Subsequent SEC disclosure:Shell — Form 20-F 2022, Nord Stream 2 Loan. Shell
2. EUROPEAN LAW: THE PROBLEM OF AN INDEPENDENT PIPELINE OPERATOR
The central legal issue arose from European gas-market regulation.
European legislation generally seeks to prevent companies controlling gas production or supply from exercising improper influence over the networks transporting that gas.
The objective is to maintain competition, protect access to infrastructure and prevent discriminatory treatment of other market participants.
These requirements are commonly described as unbundling.
In simplified terms, they concern the separation of transmission-system operations from gas production and supply interests.
But European law recognises different models under specified conditions.
One is the independent transmission operator model, commonly abbreviated to ITO.
Under this model, an operator may remain within a vertically integrated energy group while being subject to detailed independence, governance and operational requirements.
That distinction is important.
The law does not necessarily require every transmission operator to have completely unrelated ultimate shareholders.
Whether an ITO arrangement is permissible depends upon compliance with the applicable statutory conditions.
Nord Stream 2 AG applied for certification under this model.
The company was controlled by Gazprom, which was also a major producer and supplier of natural gas.
The regulator therefore needed to examine whether the proposed arrangements satisfied the relevant independence requirements.
There were additional obligations involving third-party access, tariffs and regulatory oversight.
The legal framework had become particularly important following the 2019 amendment to the European Gas Directive.
That amendment extended relevant internal-market rules to gas transmission pipelines connecting European Union Member States with countries outside the Union.
Nord Stream 2 was directly affected.
The project company unsuccessfully sought a derogation from certain requirements.
On 25 August 2021, the Düsseldorf Higher Regional Court upheld the refusal.
The court concluded that Nord Stream 2 had not been completed before the statutory cutoff date of 23 May 2019.
Consequently, it did not qualify for the derogation sought.
That decision did not mean the pipeline could never operate.
It meant that the applicable regulatory requirements could not be avoided through that particular exemption.
The company would have to pursue certification within the relevant legal framework.
Judicial context: PGNiG — Contemporary Account of Düsseldorf Higher Regional Court Judgment, 25 August 2021. Later European judicial findings: Court of Justice of the European Union — General Court Judgment, 27 November 2024. en-ogie.pgnig.pl
3. 8 SEPTEMBER 2021: THE CERTIFICATION CLOCK STARTS
The German Federal Network Agency’s official case record establishes the chronology.
The proceedings were assigned reference BK7-21-056.
Nord Stream 2 AG submitted its certification application on 11 June 2021.
After receiving the necessary supporting documents, the regulator determined that the application was sufficiently complete for the statutory examination period to begin.
That period commenced on 8 September 2021.
The Bundesnetzagentur then had four months to prepare a draft decision and submit it to the European Commission.
The Commission would have an opportunity to examine the draft and provide its opinion.
The German regulator would subsequently need to take that opinion into account before adopting its final decision.
This was a multi-stage regulatory process.
The expiry of the German regulator’s initial four-month examination period would not, by itself, automatically authorise commercial operation.
Nor would the submission of a draft decision to Brussels amount to final approval.
The timing nevertheless mattered.
Without interruption, the initial German examination period would have run until early January 2022.
For the pipeline’s financiers, that timetable offered the possibility of movement towards commercial operations after years of delays.
But the application was not being assessed in isolation.
Other European energy companies wanted to participate.
They maintained that certification could affect competition, energy security and existing gas transportation routes.
The Bundesnetzagentur’s records establish that those concerns had already entered the proceedings before the November suspension.
Primary document: Bundesnetzagentur — Official Certification Case Register, BK7-21-056. Contemporaneous corroboration: S&P Global — German Regulator Confirms Completion of Application, 13 September 2021. Federal Network Agency
4. 21 SEPTEMBER 2021: POLISH COMPANIES JOIN THE PROCEEDINGS
On 21 September 2021, the Bundesnetzagentur admitted two Polish energy companies to the certification proceedings.
They were PGNiG SA and PGNiG Supply & Trading GmbH.
PGNiG was a major Polish gas company.
Its German subsidiary participated in European gas trading and supply arrangements.
The companies had formally requested admission.
They argued that Nord Stream 2’s operation could affect their commercial interests and the functioning of the European gas market.
Their concerns included Gazprom’s control of the project company.
They also raised questions concerning independent operation, access for third parties and the applicable tariff arrangements.
These were not new objections invented after the pipeline had been completed.
PGNiG and its subsidiary had previously participated in proceedings concerning Nord Stream 2’s unsuccessful attempt to obtain a regulatory derogation.
On 25 August 2021, they welcomed the Düsseldorf court’s decision upholding the refusal of that exemption.
They subsequently pursued participation in the operator certification process.
The German regulator accepted their request.
But admission to the proceedings did not mean that PGNiG possessed a veto.
Nor did it establish that the Polish companies’ objections were correct.
It provided a procedural opportunity to present arguments and have their relevant interests considered.
This distinction is important.
Participation in a regulatory proceeding is not the same as obtaining a favourable final decision.
The Bundesnetzagentur remained responsible for applying German and European law.
Authenticated evidence: Bundesnetzagentur — PGNiG Admission, 21 September 2021. Corporate source: PGNiG — Original Application for Participation, 2 August 2021. OGiE
5. 26 OCTOBER 2021: THE GERMAN GOVERNMENT ISSUES A FAVOURABLE SECURITY ASSESSMENT
One of the most important documents in today’s investigation is dated 26 October 2021.
It was prepared by Germany’s Federal Ministry for Economic Affairs and Energy.
Its title, translated from German, concerns the examination of security of supply under Sections 4b(2) and 4b(3) of the German Energy Industry Act.
The assessment formed part of the certification procedure for Nord Stream 2 AG.
It addressed whether certifying the proposed operator would endanger the security of gas supplies to Germany or the European Union.
The ministry reached a favourable conclusion.
It determined that granting certification would not threaten German or European gas security.
Reuters reported the finding on 26 October.
The ministry had also given neighbouring European Union countries an opportunity to participate in consultations.
They included Poland, the Czech Republic, Austria, Italy, Hungary, Estonia, Latvia and Lithuania.
This was a significant development.
The project had attracted extensive criticism over its geopolitical implications and its potential effect upon European dependence on Russian gas.
Yet Germany’s economy ministry concluded, within the statutory assessment it had undertaken, that certification would not endanger security of supply.
That conclusion must be understood precisely.
It was a formal assessment under a particular legal provision.
It was not a general declaration that Nord Stream 2 presented no geopolitical risks.
It did not guarantee that Russia would remain a reliable gas supplier indefinitely.
It did not resolve the separate competition and independence requirements.
And it was not the final certification decision.
The Bundesnetzagentur remained responsible for determining whether the proposed operator satisfied the relevant regulatory conditions.
Nevertheless, the October finding was an important part of the approval process.
Germany’s own economy ministry had concluded that certification was compatible with security of supply.
The historical significance becomes clearer when the subsequent events of February 2022 are considered.
The assessment was later withdrawn by a different German government in fundamentally altered circumstances.
But the original decision must be evaluated according to the evidence and statutory task before the ministry in October 2021.
Authenticated government document: German Federal Ministry for Economic Affairs — Security-of-Supply Assessment, 26 October 2021.
Contemporaneous reporting: Reuters — German Ministry Finds Certification Would Not Threaten Gas Supply, 26 October 2021. Devdiscourse
6. THE IMPORTANT DISTINCTION: A FAVOURABLE MINISTERIAL ASSESSMENT WAS NOT FINAL APPROVAL
The October decision presents an apparent contradiction.
How could Germany’s economy ministry conclude that certification would not threaten gas security, only for the energy regulator to suspend certification three weeks later?
The answer lies in the different legal responsibilities of the institutions.
The ministry’s assessment concerned security of supply.
The Bundesnetzagentur’s responsibilities extended to the statutory requirements governing the transmission-system operator.
Those requirements included the organisation, governance and independence of the proposed operator.
The ministry could reach a favourable conclusion about security of supply without resolving every aspect of operator certification.
Similarly, the regulator could identify a legal deficiency in the proposed operating structure without reversing the ministry’s security assessment.
The decisions were therefore not necessarily inconsistent.
They addressed separate questions.
A favourable assessment under one requirement did not remove the obligation to satisfy the others.
The distinction is central to understanding the proceedings.
The ministry had not granted permission to operate the pipeline.
It had supplied one component of the statutory certification process.
The final regulatory decision remained outstanding.
This is why the subsequent suspension must not be presented as proof that the regulator had rejected the ministry’s assessment.
The November announcement identified a different reason for stopping the proceedings.
7. 15 NOVEMBER 2021: UKRAINIAN COMPANIES ARE ADMITTED
The next development occurred just one day before the suspension.
On 15 November 2021, the Bundesnetzagentur admitted two Ukrainian entities to the proceedings.
They were Naftogaz of Ukraine and the Gas Transmission System Operator of Ukraine, commonly known as GTSOU.
The admission is recorded directly in the German regulator’s official case register.
This is a particularly important piece of documentary evidence.
Ukraine was not merely expressing political opposition from outside the certification process.
Its energy companies had obtained formal standing to participate.
Naftogaz welcomed the decision.
Its chief executive, Yuriy Vitrenko, argued that Nord Stream 2 AG should not receive preferential treatment and must satisfy the requirements of European competition and energy legislation.
He also maintained that the pipeline would undermine European energy security and competition.
The Ukrainian operator expressed related concerns.
Its position was that Nord Stream 2 would reduce the importance of existing overland gas transportation routes through Ukraine.
It also argued that the concentration of additional Russian gas flows through Baltic Sea pipelines could weaken the resilience of Europe’s transportation network.
These were the companies’ stated positions.
They were not findings made by the German regulator.
Their participation did not establish that Gazprom or Nord Stream 2 AG had violated European competition law.
Nor did it confer automatic authority to block certification.
Nevertheless, the decision made the proceedings more complex.
The regulator now had formally participating businesses whose interests extended beyond Germany.
The resulting process reflected a broader European dispute about the organisation of gas transportation infrastructure.
Authenticated German record: Bundesnetzagentur — Admission of Ukrainian Companies, 15 November 2021.
Contemporary Ukrainian sources: Naftogaz — Official Statement, 15 November 2021 and GTSOU — Participation in Nord Stream 2 Certification. Naftogaz
8. 16 NOVEMBER 2021: THE BUNDESNETZAGENTUR SUSPENDS CERTIFICATION
The decisive announcement came on 16 November 2021.
The Bundesnetzagentur issued a formal press release from Bonn.
Its heading was:
Certification procedure for Nord Stream 2 suspended
The authority confirmed that it had examined the application documents.
It concluded that certification of an operator of the pipeline could be considered only if the operator was organised in a legal form under German law.
Nord Stream 2 AG was incorporated in Switzerland.
The company was based in Zug.
It had decided not to transform its existing Swiss legal entity into a German company.
Instead, it proposed establishing a subsidiary under German law.
That subsidiary would become responsible for the German section of the pipeline.
The regulator explained that the new company would need to become the owner and operator of the relevant infrastructure.
It would also need to satisfy the requirements applicable to an independent transmission operator.
The Bundesnetzagentur identified Sections 4a, 4b and 10 to 10e of Germany’s Energy Industry Act.
The consequences were clear.
The original application could not simply proceed to a final approval in its existing form.
The proposed German subsidiary would need to receive the relevant assets and personnel.
It would need to submit the necessary documentation.
The regulator would then examine whether the requirements had been satisfied.
Until that occurred, the proceedings would remain suspended.
This was a temporary procedural suspension, not a final refusal of certification.
The distinction matters.
The regulator did not announce that Nord Stream 2 could never operate.
It identified conditions that needed to be met before the examination could resume.
The company had a possible route towards satisfying those requirements.
But it would take time.
Primary source: Bundesnetzagentur — Original Announcement, 16 November 2021. Federal Network Agency
9. THE SWISS COMPANY AND THE GERMAN SUBSIDIARY
The most revealing feature of the November decision concerns the relationship between Nord Stream 2 AG and the proposed German subsidiary.
Nord Stream 2 AG was a Swiss company controlled by Gazprom.
It had been responsible for the development and construction of the pipeline.
But the German regulator required a legal structure capable of satisfying the relevant domestic operator-certification rules.
The company proposed establishing a separate German entity.
That entity would be responsible for the German section of Nord Stream 2.
The regulator identified two essential transfers.
The first concerned the relevant infrastructure assets.
The second concerned the personnel necessary to operate the business.
These were not merely administrative details.
An operator cannot demonstrate its operational independence simply by registering a company name.
The company must possess or control the resources needed to perform its regulated functions.
The regulator therefore needed evidence concerning the new subsidiary’s assets, staffing and governance.
The German entity would also have to demonstrate compliance with the ITO requirements.
The establishment of a subsidiary would not automatically resolve every issue concerning Gazprom’s ultimate control.
The independence requirements would still need to be assessed.
This distinction is especially important.
Creating a German subsidiary was a necessary step identified by the regulator. It was not, by itself, a guarantee of certification.
The official announcement expressly stated that the procedure would remain suspended until the required transfers had occurred and the new documentation could be examined.
It did not state that incorporating the subsidiary alone would be sufficient. Federal Network Agency
10. WHAT HAPPENED TO THE FOUR-MONTH DEADLINE?
The suspension also affected the regulatory timetable.
Before 16 November, the regulator had been working within a four-month period beginning on 8 September 2021.
That period would ordinarily have led to a draft decision in early January 2022.
But the suspension interrupted the examination.
The Bundesnetzagentur explained that it would resume the process within the remainder of the statutory period once the necessary conditions had been met.
This is a significant distinction.
The regulator was not announcing a new four-month period automatically beginning on 16 November.
Nor was it stating that certification would follow immediately upon incorporation of the German subsidiary.
The new company first needed to demonstrate that the relevant requirements had been satisfied.
The remaining examination would then continue.
The European Commission would subsequently have an opportunity to review the German regulator’s draft decision.
The Commission’s opinion formed part of the statutory process.
It was not simply an informal political consultation.
The German regulator would need to give the opinion appropriate consideration before adopting its final decision.
The consequences for the expected operating timetable were therefore substantial.
Even if the subsidiary could be established quickly, further regulatory steps remained.
The original expectation of an early-2022 decision had become increasingly uncertain.
11. REUTERS: THE MARKETS RESPOND IMMEDIATELY
The commercial significance of the suspension was reported immediately.
On 16 November 2021, Reuters correspondent Vera Eckert reported the German regulator’s decision.
European natural-gas prices rose sharply following the announcement.
Reuters recorded that the Dutch front-month gas contract reached approximately €90.40 per megawatt-hour, having risen by almost 11% during the day’s trading.
The report attributed the increase partly to concerns about the postponement of Nord Stream 2’s expected commercial operations.
Europe was already experiencing exceptionally high energy prices.
Gas storage levels and winter supply prospects were attracting considerable attention.
The pipeline’s supporters argued that commercial operation could provide additional transportation capacity.
Opponents maintained that it could increase European dependence upon Russia and undermine Ukraine’s role as a transit country.
The market reaction reflected uncertainty concerning an already complicated supply situation.
It did not establish that Nord Stream 2 would necessarily have reduced prices by a particular amount.
Nor did it prove that the regulatory suspension was the only factor influencing European gas markets that day.
Nevertheless, the price movement was a documented contemporary response.
Reuters also quoted energy-market analysts who considered that the suspension could materially delay the expected start of commercial operations.
The point is significant for the financing history.
By November 2021, the project had been physically completed.
But its commercial value still depended upon the ability to operate.
Delays therefore remained financially relevant to the lenders.
Contemporaneous source: Reuters — German Regulator Suspends Nord Stream 2 Certification, 16 November 2021. Yahoo Finance
12. THE KREMLIN’S RESPONSE: A COMPLICATED REGULATORY PROCESS
Russia’s response provides an important contemporary perspective.
On 17 November 2021, Reuters reported comments from Kremlin spokesman Dmitry Peskov.
Peskov described certification as a complicated procedure.
He stated that the project company was addressing the German regulator’s requirements.
The Kremlin did not publicly present the suspension as definitive proof that Germany had abandoned Nord Stream 2.
Instead, its position was that the process should continue.
This response is historically relevant.
The project remained commercially and politically significant to Russia.
Gazprom had invested substantial resources in its development.
The pipeline had been completed after years of difficulties.
The Russian government’s stated position was that certification should proceed in accordance with the applicable requirements.
That position did not resolve the legal questions raised by the regulator.
Nor did it establish that the proposed operator satisfied the necessary independence requirements.
It demonstrates that, in November 2021, Russia continued to regard commercial operation as a realistic objective.
Contemporaneous Reuters reporting: Kremlin Responds to Nord Stream 2 Certification Suspension, 17 November 2021. Boursorama
13. JANUARY 2022: THE GERMAN SUBSIDIARY IS CREATED
The next important development occurred on 26 January 2022.
Nord Stream 2 AG announced the establishment of its German subsidiary.
The company was named Gas for Europe GmbH.
It was based in Schwerin, in the German state of Mecklenburg-Western Pomerania.
Its intended responsibilities included ownership and operation of the German section of Nord Stream 2.
Contemporary reporting identified the relevant section as approximately 54 kilometres of pipeline in German territorial waters, together with the landing facilities at Lubmin.
This was a substantive response to the Bundesnetzagentur’s November decision.
The project company had taken a step towards establishing the legal structure required by the regulator.
But the regulator made clear that the certification procedure remained suspended.
The creation of the subsidiary did not establish that the transfer of all necessary assets and personnel had been completed.
Nor did it demonstrate that every independence and governance requirement had been met.
The authority still needed to examine the relevant documentation.
Thus, even in late January 2022, the process had not reached final approval.
The new subsidiary existed. The certification decision remained outstanding.
This is another important qualification.
The November 2021 suspension had not permanently prevented Nord Stream 2 from taking steps to comply.
But the creation of the German company was not equivalent to receiving a licence to commence commercial transportation.
Contemporaneous report: dpa-AFX — Nord Stream 2 Establishes German Subsidiary, 26 January 2022. Yahoo Finance
14. 22 FEBRUARY 2022: THE SECURITY ASSESSMENT IS WITHDRAWN
The most consequential subsequent development came on 22 February 2022.
Germany’s Federal Ministry for Economic Affairs and Climate Action announced that the certification process for Nord Stream 2 had been halted.
The announcement followed Russia’s recognition of the separatist-controlled territories in eastern Ukraine.
The ministry explained that the geopolitical situation required a reassessment.
Crucially, it withdrew the earlier security-of-supply assessment issued by the previous German government on 26 October 2021.
That earlier assessment had concluded that certification would not endanger German or European gas supplies.
The new government stated that the changed circumstances required the issue to be reconsidered.
Without a valid favourable security-of-supply assessment, the Bundesnetzagentur could not issue a positive certification decision.
This was a fundamentally different development from the November procedural suspension.
In November 2021, the problem concerned the legal organisation of the proposed operator.
In February 2022, the German government withdrew an essential favourable assessment concerning security of supply.
The two decisions arose from different legal considerations.
The February measure was also taken before Russia launched its full-scale invasion of Ukraine on 24 February.
The exact chronology matters.
Germany withdrew the earlier assessment on 22 February.
Russia’s full-scale invasion followed two days later.
It would therefore be inaccurate to describe the 22 February decision as having been taken after the full-scale invasion.
The decision responded to the escalating crisis and Russia’s recognition of the separatist-controlled territories.
The invasion then transformed the situation further.
The regulatory timetable that had appeared capable of resuming in January was overtaken by a fundamental change in Germany’s assessment of the geopolitical risks.
Authenticated government source: German Federal Ministry for Economic Affairs — Withdrawal of Security Assessment, 22 February 2022. Economic Affairs Ministry
15. THE COURT RECORD: WAS EUROPEAN REGULATION UNFORESEEABLE?
A later European judicial decision provides additional historical context.
On 27 November 2024, the General Court of the European Union delivered judgment in Case T-526/19 RENV, Nord Stream 2 v Parliament and Council.
The proceedings concerned the 2019 amendment to the European Gas Directive.
Nord Stream 2 AG had challenged the application of the amended rules to its pipeline.
The company argued, among other matters, that the legislative changes affected its legitimate expectations and legal certainty.
The General Court dismissed the challenge.
It concluded that Nord Stream 2 AG could have foreseen the possibility that European institutions would extend internal-market requirements to pipelines connecting Member States with third countries.
The court also rejected the suggestion that the inability to obtain the relevant derogation necessarily prevented the company from operating under commercially viable conditions.
These were judicial findings concerning the validity of the European legislative framework.
They were not findings that Shell’s directors had acted improperly.
Nor did the court determine whether Shell’s original financing decision had been commercially prudent.
The proceedings also did not resolve the separate November 2021 operator-certification application.
Nevertheless, the judgment contributes to the wider legal record.
It demonstrates that the applicable European regulatory requirements were not subsequently found invalid merely because they affected Nord Stream 2’s commercial expectations.
The court distinguished between the financial consequences of regulation and the legality of the regulatory framework itself.
Judicial source: Court of Justice of the European Union — General Court Judgment, 27 November 2024, Case T-526/19 RENV. curia
16. THE SHELL CONNECTION: FROM FINANCING AGREEMENT TO WRITE-DOWN
For Shell shareholders, the financial chronology is clear.
On 24 April 2017, Shell signed its financing agreement.
Its final loan instalments were made during the second quarter of 2020.
By September 2021, the pipeline’s physical construction had been completed.
In October, Germany’s economy ministry issued a favourable security-of-supply assessment.
In November, the regulator suspended certification because of the proposed operator’s legal structure.
In January 2022, Nord Stream 2 AG established a German subsidiary.
In February, Germany withdrew the earlier security assessment amid the escalating Ukraine crisis.
Shell subsequently announced its intention to end involvement in Nord Stream 2 and withdraw from Russian ventures.
Its financial disclosures confirm a full write-down of the Nord Stream 2 loan during the first quarter of 2022.
The amount was $1.126 billion.
The company’s SEC filings provide direct evidence of the financial outcome.
But the documents do not establish that the November 2021 regulatory suspension independently caused the loss.
Nor do they establish that Shell controlled the certification process.
The write-down followed the broader developments of early 2022, including Russia’s full-scale invasion of Ukraine and Shell’s announced withdrawal from Russian activities.
The November suspension remains relevant because it demonstrates that the pipeline had not achieved commercial operation even before those events.
It was one of several outstanding obstacles.
Shell had provided financing for a completed pipeline that had not obtained the regulatory authorisation required to operate commercially.
That is a significant financial circumstance.
But it is not, by itself, evidence of negligence, misconduct or breach of duty.
Such conclusions would require examination of Shell’s internal risk assessments, the financing contracts, management decisions and other relevant evidence.
Authenticated Shell filing: Shell — SEC Form 20-F 2022, Nord Stream 2 Disclosure. Contemporaneous financial reporting: Shell — First Quarter 2022 Financial Results and Russian Withdrawal. SEC
DOCUMENTARY FINDINGS
ESTABLISHED FACTS
Shell signed its Nord Stream 2 financing agreement in April 2017.
Gazprom remained the sole shareholder of Nord Stream 2 AG.
Shell was one of five European companies providing financing and guarantees for the project.
Shell’s final loan instalments were made during the second quarter of 2020.
Nord Stream 2’s physical construction was completed in September 2021.
The Bundesnetzagentur’s statutory examination period began on 8 September 2021.
Two Polish energy companies were admitted to the proceedings on 21 September 2021.
On 26 October 2021, Germany’s economy ministry concluded that certification would not endanger German or European security of gas supply.
Two Ukrainian energy companies were formally admitted to the proceedings on 15 November 2021.
On 16 November 2021, the Bundesnetzagentur suspended certification of Nord Stream 2 AG as an independent transmission operator.
The reason given concerned the requirement for an operator organised under German law.
Nord Stream 2 AG proposed establishing a German subsidiary responsible for the German section of the pipeline.
The regulator required the transfer of essential assets and personnel and the submission of appropriate documentation.
The suspension was temporary and procedural.
It was not a final rejection of certification.
On 26 January 2022, Nord Stream 2 AG announced the establishment of Gas for Europe GmbH.
The certification process remained suspended pending satisfaction of the relevant conditions.
On 22 February 2022, Germany’s government withdrew the favourable October 2021 security-of-supply assessment.
Russia launched its full-scale invasion of Ukraine on 24 February 2022.
Shell subsequently recorded a full $1.126 billion write-down of its Nord Stream 2 loan during the first quarter of 2022.
DOCUMENTED POSITIONS AND CONTESTED INTERPRETATIONS
Nord Stream 2 AG sought certification under the independent transmission operator model.
Polish PGNiG companies argued that the project presented problems concerning independence, competition, third-party access and security of supply.
Naftogaz and GTSOU maintained that Nord Stream 2 threatened Ukraine’s position as a gas transit country and could undermine European energy security.
The German economy ministry reached a different conclusion concerning the specific statutory security-of-supply assessment in October 2021.
Russia maintained that the certification process should continue in accordance with the relevant legal requirements.
These positions are documented.
They should not be confused with final judicial findings concerning every issue raised.
The German regulator was responsible for applying the relevant statutory requirements.
The participation of interested parties did not confer an automatic veto over its decision.
MATTERS NOT ESTABLISHED
The examined evidence does not establish that Shell controlled the German certification proceedings.
It does not establish that Shell instructed Nord Stream 2 AG to adopt the proposed German subsidiary structure.
It does not establish that the Bundesnetzagentur rejected the October 2021 security-of-supply assessment in November.
It does not establish that admitting Polish and Ukrainian parties caused the suspension.
It does not establish that the proposed German subsidiary ultimately satisfied every statutory requirement.
It does not establish that the November suspension was a permanent refusal of certification.
It does not establish that the regulator was acting under improper political instructions.
It does not establish that Shell violated German or European energy legislation.
It does not establish that Shell’s directors concealed material information or deliberately disregarded regulatory risks.
And it does not establish that the November 2021 suspension independently caused Shell’s eventual $1.126 billion write-down.
These distinctions are essential to an accurate documentary account.
EDITORIAL COMMENTARY: THE DIFFERENCE BETWEEN A COMPLETED INVESTMENT AND A COMMERCIAL SUCCESS
The German certification proceedings reveal something fundamental about international infrastructure investment.
Completion of construction is not the same as commercial success.
A pipeline may be physically finished while still requiring regulatory permission to operate.
A project company may possess substantial assets while lacking the legal status necessary to use them commercially.
A financier may have fulfilled its contractual obligations while remaining exposed to decisions made by regulators, governments and other parties.
Nord Stream 2 illustrates each of these problems.
By September 2021, the project had overcome considerable construction difficulties.
American sanctions had disrupted the original pipe-laying arrangements.
Alternative vessels had been deployed.
The physical infrastructure had eventually been completed.
Yet commercial operation remained unavailable.
The problems were no longer principally about laying pipes beneath the Baltic Sea.
They concerned legal organisation, competition, operator independence and security of supply.
These questions had significant implications for the project’s financial prospects.
The German records also reveal the importance of distinguishing decisions that appear contradictory.
The October 2021 ministerial assessment was favourable.
The November 2021 regulatory decision was not.
But they were not examining precisely the same issue.
The ministry considered whether certification would threaten security of supply.
The regulator considered whether the proposed operator satisfied the applicable legal requirements.
A project could pass one examination and remain unable to proceed because of deficiencies identified in another.
The admission of Polish and Ukrainian companies added another dimension.
Their interests were not identical to those of Gazprom or the European financiers.
Poland had concerns about energy competition and reliance on Russian supplies.
Ukraine faced the possibility of losing gas transit revenues and strategic importance.
Germany was considering its own energy-market requirements.
The European Commission had responsibilities under internal-market legislation.
And Shell remained financially exposed as one of the lenders.
The resulting conflict cannot be reduced to a simple contest between commercial investment and political interference.
The legal framework existed for identifiable regulatory purposes.
The interested parties had different commercial and national concerns.
The project company had legal rights and obligations of its own.
Understanding the outcome requires preserving these distinctions.
The events of February 2022 add another important lesson.
A government assessment made under one set of circumstances may cease to be appropriate when those circumstances fundamentally change.
The October 2021 report represented the German government’s judgment at that time.
Its withdrawal in February 2022 reflected a different geopolitical environment.
The later decision does not automatically prove that the earlier assessment was dishonest or improperly prepared.
Equally, the fact that an earlier assessment was formally issued does not mean it should remain in force regardless of subsequent developments.
The proper historical question concerns the evidence, assumptions and statutory responsibilities underlying each decision.
For Shell shareholders, the larger issue is investment risk.
Shell helped finance infrastructure whose operation depended upon a succession of regulatory and political decisions.
The fact that the company was a lender rather than a shareholder in Nord Stream 2 AG did not eliminate its financial exposure.
But that position also did not necessarily give it control over the operator’s regulatory strategy.
The eventual write-down demonstrates the scale of the financial consequences.
It does not, without additional evidence, establish that management could have prevented the loss.
What the documentary record does establish is that the risks did not suddenly appear in February 2022.
Nord Stream 2 had already encountered sanctions, construction interruptions, regulatory disputes and substantial political opposition.
By November 2021, even after physical completion, the pipeline had not obtained certification to operate.
That history is relevant when examining the investment’s eventual outcome.
The central lesson is that completing an asset does not mean completing the investment case.
A pipeline without the required operating authorisation is not equivalent to a commercially functioning pipeline.
And a financier’s exposure may continue long after construction has ended.
This is precisely why preserving the original regulatory records matters.
The October ministerial assessment, November regulator announcement, statements by Polish and Ukrainian participants and subsequent German government decisions tell different parts of the same history.
None should be omitted simply because it complicates a preferred interpretation.
The objective of The Shell Leaks Files is to preserve the documentary record and allow readers to distinguish what was known, what was disputed and what was ultimately established.
In the Nord Stream 2 case, that distinction is particularly important.
The pipeline had been built. The regulatory process was unfinished. And the geopolitical crisis was about to transform its commercial prospects altogether.
SOURCE RECORD AND DOCUMENTARY PROVENANCE
The following documents and contemporaneous reports provide the principal evidential foundation for this instalment. Official regulatory records, authenticated company disclosures and judicial sources 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 identifying the European financing companies, their maximum indicated commitments and Gazprom’s ownership of Nord Stream 2 AG.
Shell — Official 2017 Press Release Archive
2. Bundesnetzagentur — Certification Proceedings BK7-21-056
Nord Stream 2 AG — Application for Certification as an Independent Transmission Operator.
The central authenticated regulatory case register.
Records the commencement of the examination period on 8 September 2021, the admission of Polish and Ukrainian companies and the suspension of the proceedings on 16 November 2021.
Bundesnetzagentur — Original Certification Case Record
3. PGNiG — 2 August 2021
PGNiG and PST Seek Participation in Nord Stream 2 Certification Proceedings.
Contemporary corporate statement explaining the Polish companies’ application and their objections concerning independence, competition and energy-market regulation.
PGNiG — Original Participation Announcement
4. Düsseldorf Higher Regional Court — 25 August 2021
Nord Stream 2 Regulatory Derogation Proceedings.
Judicial decision concerning the project’s eligibility for an exemption from amended European gas-market requirements.
The court upheld the regulator’s refusal.
PGNiG — Contemporary Account of the Düsseldorf Court Decision
5. Bundesnetzagentur — 21 September 2021
Admission of PGNiG SA and PGNiG Supply & Trading GmbH.
The official case record confirms the admission of both companies to the operator certification proceedings.
German Regulatory Case Register — Polish Participants
6. German Federal Ministry for Economic Affairs — 26 October 2021
Security-of-Supply Assessment Under Sections 4b(2) and 4b(3) of the Energy Industry Act.
Original government assessment concluding that certification of Nord Stream 2 AG would not endanger German or European gas supply security.
German Government — Original October 2021 Assessment
7. Reuters — 26 October 2021
Certifying Nord Stream 2 Poses No Threat to Gas Supply to EU — Germany.
Contemporaneous reporting of the ministry’s assessment and consultations with neighbouring European Union countries.
Reuters — German Security-of-Supply Decision
8. Naftogaz of Ukraine — 15 November 2021
Bundesnetzagentur Accepts Naftogaz’s Involvement in Nord Stream 2 Certification.
Original corporate statement recording the decision and explaining Naftogaz’s concerns about competition, energy security and Gazprom’s control.
Naftogaz — Original Statement, 15 November 2021
9. Gas Transmission System Operator of Ukraine — 15 November 2021
Ukrainian Gas Operator Admitted to German Certification Proceedings.
Official company statement explaining its participation and concerns about European gas transportation arrangements.
GTSOU — Original Participation Statement
10. Bundesnetzagentur — 16 November 2021
Certification Procedure for Nord Stream 2 Suspended.
The decisive primary document.
Explains the requirement for a German legal entity, transfer of assets and personnel, compliance with the independent transmission operator requirements and the conditions for resuming proceedings.
Bundesnetzagentur — Original Suspension Announcement
11. Reuters — 16 November 2021
German Regulator Suspends Nord Stream 2 Certification.
Contemporaneous reporting by Vera Eckert recording the suspension, immediate market reaction and potential delays to commercial operations.
Reuters — Original November 2021 Report
12. Nord Stream 2 AG — 26 January 2022
Establishment of Gas for Europe GmbH.
Contemporaneous reporting confirming the creation of the proposed German subsidiary in Schwerin and its intended responsibilities for the German pipeline section.
dpa-AFX — German Subsidiary Established
13. German Federal Ministry for Economic Affairs — 22 February 2022
Withdrawal of the October 2021 Security-of-Supply Assessment.
Official announcement explaining the government’s decision to withdraw the earlier assessment and halt the certification process amid the worsening geopolitical situation.
German Government — February 2022 Certification Decision
14. General Court of the European Union — 27 November 2024
Case T-526/19 RENV, Nord Stream 2 v Parliament and Council.
Judicial determination concerning the challenge to the amended European Gas Directive.
Included as context concerning the regulatory framework rather than as a determination of the November 2021 operator-certification application.
European Court — Official Judgment Summary
15. Shell plc — 2022 Financial Disclosures
Shell Form 20-F and SEC Filings.
Authenticated corporate records confirming the completion of the Nord Stream 2 loan instalments during the second quarter of 2020 and the subsequent $1.126 billion write-down in the first quarter of 2022.
Shell — Official SEC Financial Disclosure
DOCUMENTARY DISCLAIMER
This instalment distinguishes authenticated government and corporate documents, statutory provisions, regulatory records, judicial findings and contemporaneous reporting from allegations, contested interpretations and editorial commentary.
The German economy ministry’s security-of-supply assessment dated 26 October 2021 was a formal finding under the relevant statutory requirements. It was not final certification of Nord Stream 2 AG.
The Bundesnetzagentur’s decision of 16 November 2021 was a temporary procedural suspension concerning the proposed operator’s legal structure. It was not a final refusal of certification.
The admission of Polish and Ukrainian energy companies to the proceedings did not establish the correctness of every argument they advanced or confer an automatic veto over certification.
The Düsseldorf Higher Regional Court and European General Court proceedings concerned separate questions arising under European gas-market regulation.
No allegation is made that Shell controlled the German certification proceedings, violated applicable law, concealed material information or improperly influenced regulatory decisions.
The article does not establish that the November 2021 suspension independently caused Shell’s $1.126 billion write-down.
The public records examined do not disclose every contractual arrangement, internal risk assessment or management decision relevant to Shell’s original financing.
Further authenticated evidence, factual corrections and responses from Shell, the German authorities and the other parties concerned remain welcome.
The website’s general disclaimer also applies.
NEXT IN THE SHELL LEAKS FILES
SLF-2007-101 — The Sakhalin Papers XCI: The Security Report Withdrawn — How Berlin’s October 2021 Green Light Became a February 2022 Stop Sign
The next instalment will examine one of the most consequential reversals in the entire Nord Stream 2 documentary history.
On 26 October 2021, Germany’s economy ministry reached a favourable conclusion concerning the project’s implications for gas security.
On 22 February 2022, the ministry withdrew that conclusion.
The interval was less than four months.
Yet the geopolitical circumstances had changed profoundly.
The next investigation will return to the original October 2021 assessment and examine the assumptions underlying its conclusions.
What did the German government mean by security of supply?
How did it evaluate dependence upon Russian gas?
What role did existing Ukrainian and other European transit routes play in the analysis?
How were the interests of neighbouring European countries considered?
And what changed sufficiently between October and February to justify withdrawing the assessment?
The investigation will also examine the position advanced by Ukraine’s gas transmission operator.
In December 2021, GTSOU formally requested that the German government reconsider its earlier security assessment.
The request provides an important contemporaneous counterpoint to the ministry’s original conclusion.
The next instalment will compare the available government documents with the concerns raised by Ukrainian and Polish energy companies, without treating their allegations as established judicial findings.
It will then examine Germany’s February 2022 decision against the escalating events in eastern Ukraine.
The objective will be to distinguish changes in the underlying evidence from changes in political and security circumstances.
For Shell shareholders, the story has particular importance.
A financing commitment made in April 2017 remained exposed to an investment whose commercial prospects could be transformed by a government decision issued years later.
The October assessment appeared to remove one regulatory obstacle.
The February withdrawal made a favourable certification decision impossible without a new assessment.
And the Russian invasion two days later brought a fundamentally different crisis.
In October 2021, Germany concluded that certification would not threaten gas security.
In February 2022, Germany withdrew that conclusion.
What changed in the intervening months?
The Sakhalin Papers continue.
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