THE SHELL LEAKS FILES — 28 OCTOBER 2026
SLF-2007-101
The Sakhalin Papers XCI: The Security Report Withdrawn — How Germany’s October 2021 Approval Became a February 2022 Reversal
In October 2021, Germany’s economy ministry concluded that certifying Nord Stream 2 would not endanger European gas supplies. Its 54-page assessment acknowledged Russian state control of Gazprom, previous supply interruptions and objections from Poland and Ukraine. Four months later, Germany withdrew the assessment. The original document, subsequently released to the public, reveals what officials believed about Russian gas dependence before the invasion of Ukraine — and why the distinction between commercial infrastructure and geopolitical risk became so consequential for Shell’s investment.
Archive reference: SLF-2007-101
Publication date: 28 October 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-100, The Sakhalin Papers XC, 27 October 2026
Principal sources: German Federal Ministry for Economic Affairs, Security-of-Supply Assessment dated 26 October 2021; the ministry’s announcement dated 22 February 2022; Bundesnetzagentur certification proceedings BK7-21-056; Gas Transmission System Operator of Ukraine correspondence dated December 2021; the German-American joint statement of 21 July 2021; Court of Justice of the European Union judgment C-848/19 P; Shell’s original 2017 financing announcement; Shell’s announcement dated 28 February 2022; and Shell’s financial statements filed with the US Securities and Exchange Commission.
Evidence classification: Authenticated government documents, statutory provisions, judicial findings, contemporary corporate statements, contemporaneous reporting and separately identified editorial commentary.
INTRODUCTION: TWO GERMAN GOVERNMENTS, TWO DIFFERENT ASSESSMENTS
On 26 October 2021, Germany’s Federal Ministry for Economic Affairs and Energy completed an assessment of the implications of Nord Stream 2 for the security of European gas supplies.
The document was prepared under Section 4b of Germany’s Energy Industry Act.
Its purpose was to determine whether certifying the Gazprom-controlled pipeline operator would endanger gas supplies to Germany or the European Union.
The conclusion was favourable to Nord Stream 2.
The ministry found that certification would not create the security-of-supply danger contemplated by the legislation.
It reached that conclusion after examining the European gas market, Russia’s position as a supplier, the risks associated with dependence upon Russian gas, the Ukrainian transit system and submissions from other European countries.
This was not a superficial assessment.
The document extended to 54 pages.
It contained detailed discussions of European gas imports, alternative supply routes, liquefied natural gas facilities, national interconnections and the consequences of potential interruptions to Russian deliveries.
It also examined Gazprom’s relationship with the Russian state.
The assessment acknowledged that Russia had previously been involved in gas supply interruptions.
Nevertheless, the ministry concluded that the available evidence did not demonstrate a sufficiently concrete threat arising from certification.
On 22 February 2022, Germany’s new government withdrew the document.
The decision followed Russia’s recognition of the separatist-controlled territories in eastern Ukraine.
Robert Habeck, Germany’s Federal Minister for Economic Affairs and Climate Action, announced that the changing geopolitical circumstances required the earlier assessment to be reconsidered.
Without a valid favourable security-of-supply assessment, Germany’s Federal Network Agency could not issue a positive certification decision.
Nord Stream 2 was effectively prevented from proceeding towards commercial operation.
Two days later, Russia launched its full-scale invasion of Ukraine.
The consequences for European energy policy were profound.
For Shell, one of the five European companies financing Nord Stream 2, the events formed part of the circumstances that eventually led to a complete write-down of its outstanding project loan.
The amount was $1.126 billion.
But the original German documents reveal a more complicated history than a simple reversal of policy.
The 2021 assessment had already considered many of the dangers that subsequently became central to European energy security.
It had acknowledged the risks.
It had examined objections.
And it had reached a favourable conclusion.
What changed was not merely the existence of those risks.
It was Germany’s assessment of their seriousness in a rapidly deteriorating geopolitical situation.
Primary records: German Ministry — Security-of-Supply Assessment, 26 October 2021 and German Ministry — Withdrawal Announcement, 22 February 2022. Politico
1. THE ORIGINAL DOCUMENT: A 54-PAGE ASSESSMENT
The document examined in this instalment is entitled:
Versorgungssicherheitsprüfung gemäß § 4b Abs. 2 und Abs. 3 EnWG.
Its title can be translated as:
Security-of-Supply Assessment under Section 4b(2) and (3) of the Energy Industry Act.
It is dated 26 October 2021.
The cover identifies the certification proceedings involving Nord Stream 2 AG as the proposed transmission-system operator.
The assessment contains eight principal analytical sections, followed by supporting material.
These address the legal basis of the examination, the proposed operator, European gas demand, existing infrastructure, the circumstances surrounding Russia and Gazprom, consultations with other countries, international treaty obligations and the overall conclusion.
The document was prepared during the final period of Angela Merkel’s government.
Peter Altmaier was the Federal Minister for Economic Affairs and Energy.
The subsequent government under Chancellor Olaf Scholz inherited the certification proceedings and the ministry’s favourable assessment.
An important archival detail concerns publication.
Although the assessment was dated October 2021, the complete document was not made publicly available at that time.
The German transparency organisation FragDenStaat records an information request submitted on 26 October 2021 seeking access to the analysis.
The request initially encountered difficulties.
The ministry subsequently informed the requester in October 2022 that the assessment had been published.
A copy is now available through the ministry’s website, and another was preserved by Politico.
This distinction matters.
The official conclusion was publicly reported in October 2021.
But the detailed reasoning underlying that conclusion became available for wider examination only later.
The complete document now allows historians to assess the government’s analysis rather than relying exclusively upon the short announcement issued at the time.
Documentary evidence: German Ministry — Original 54-Page Assessment and FragDenStaat — Information Request and Subsequent Publication Record. FragDenStaat
2. WHAT WAS THE GERMAN GOVERNMENT ACTUALLY REQUIRED TO DECIDE?
The statutory requirement was narrower than a general assessment of whether Nord Stream 2 represented a good investment or a desirable foreign-policy project.
Section 4b of Germany’s Energy Industry Act addresses certification of transmission-system operators controlled by persons from countries outside the European Union or European Economic Area.
In such circumstances, the government must assess whether certification would endanger security of supply.
The Bundesnetzagentur separately examines the operator’s compliance with requirements concerning independence, governance and transmission-system regulation.
The two assessments are related but distinct.
Germany’s economy ministry was not being asked to decide whether Gazprom was a politically attractive commercial partner.
Nor was it required to determine whether Shell and the other European financiers had made prudent investment decisions.
Its specific task concerned security of energy supply.
The 2021 assessment approached that task by considering whether certification would create a concrete danger of significant disruption to gas supplies.
This legal framework explains part of the difference between the ministry’s conclusion and the wider political controversy.
A project might be controversial for environmental, diplomatic or strategic reasons without necessarily failing the particular statutory security-of-supply test.
Conversely, a change in geopolitical circumstances could require the government to reconsider a previously favourable assessment.
The 2021 document expressly recognised that future developments could affect the continuing validity of its conclusions.
This qualification became important in February 2022.
The original assessment was a decision about a specific statutory requirement, not a comprehensive guarantee of Russia’s future conduct.
3. THE GAZPROM QUESTION: WHO CONTROLLED THE PIPELINE?
The original assessment identified the ownership arrangements behind Nord Stream 2 AG.
The project company was incorporated in Switzerland.
It was controlled by Gazprom.
Gazprom, in turn, was majority-owned by the Russian state.
The report therefore acknowledged the involvement of a foreign government in the ownership structure of the proposed operator.
That was not disputed.
The key question was what consequences might follow.
European gas-market legislation distinguishes between the companies supplying natural gas and those operating the transportation infrastructure.
The intended purpose is to prevent the operator of essential infrastructure from discriminating improperly between different suppliers or customers.
Nord Stream 2 AG sought certification as an independent transmission operator.
This model permits specified arrangements within a vertically integrated energy group, provided the relevant independence requirements are satisfied.
The German ministry considered those regulatory protections important.
It reasoned that the operator’s legal responsibilities would be different from those of the company selling the gas.
The supply contracts would remain the responsibility of the supplier.
The transmission operator would be subject to regulatory oversight.
The Bundesnetzagentur would be responsible for determining whether the necessary independence requirements had been satisfied.
This was the legal distinction underlying the ministry’s favourable conclusion.
But it was also the source of criticism from opponents.
They questioned whether regulatory separation could adequately address the consequences of Russian state influence over Gazprom.
The German assessment did not deny that influence existed.
It concluded that the available statutory mechanisms could address the relevant operator-related risks, subject to their effective implementation.
That was an assessment of the framework as it stood in October 2021.
It was not a judicial finding that Russia could never use its gas exports for political purposes.
4. THE CENTRAL ASSUMPTION: RUSSIA AS A GENERALLY RELIABLE GAS SUPPLIER
One passage in the report is particularly revealing.
In examining the circumstances of the third country controlling the proposed operator, the ministry considered Russia’s historical role as a supplier to Europe.
It described Russia as generally reliable in that role while acknowledging previous interruptions to gas supplies.
The distinction is important.
The report did not claim that supply interruptions had never occurred.
It recognised previous disputes and disruptions.
The question was whether certification of Nord Stream 2 would increase dependence upon Russia to such an extent that a concrete danger to security of supply could be established.
The ministry concluded that the available evidence did not justify such a finding.
This reasoning needs to be understood in its historical context.
In 2021, European countries still imported substantial quantities of natural gas from Russia.
Germany was particularly dependent upon imported energy.
European gas markets were also supported by imports from Norway, the Netherlands, North Africa and other suppliers, together with LNG infrastructure.
The ministry considered those alternative sources and the increasing interconnection of national gas networks.
It viewed the ability to redirect gas through alternative routes as an important protection against disruption.
The report also considered additional gas production in Russia’s Yamal Peninsula.
Nord Stream 2 was presented as a route potentially capable of transporting additional volumes from those fields into Europe.
This supported the ministry’s conclusion that the pipeline could contribute positively to transportation capacity.
But there was an important distinction.
Additional pipeline capacity from Russia was not the same as diversification away from Russian gas.
The first increased the number or capacity of transportation routes.
The second required access to different sources of supply.
Those two concepts were central to the disagreement between Germany and several neighbouring countries. Politico
5. EUROPE’S DEPENDENCE WAS ALREADY VISIBLE
The report contained detailed figures concerning European gas consumption and imports.
It acknowledged that the European Union was increasingly dependent upon imported natural gas.
For 2020, the assessment calculated an overall EU gas import dependency of approximately 87%.
It also identified Russia as the largest individual supplier.
Russian gas represented approximately 47% of the EU’s total gas imports under the report’s calculation for that year.
These figures help explain the argument advanced by critics.
If Europe was already heavily dependent upon imports, and Russia supplied such a large proportion of them, would another major Russian pipeline strengthen or weaken the security of supply?
Supporters emphasised additional infrastructure.
They argued that another route could increase flexibility and reduce the consequences of problems affecting an individual transportation corridor.
Opponents emphasised concentration of supply.
They questioned whether increasing the capacity available to a dominant supplier would deepen dependence upon that supplier.
Both arguments had an identifiable economic basis.
More infrastructure can make a transportation system more flexible.
But greater reliance upon a single supplier can create vulnerability if that supplier becomes unwilling or unable to deliver.
The German ministry’s assessment placed substantial weight upon the first consideration.
Poland, Lithuania and Ukraine placed greater emphasis upon the second.
The report’s own figures demonstrate why the disagreement was significant.
Europe’s reliance upon Russian gas was already substantial before Nord Stream 2 entered commercial operation.
The pipeline was therefore being assessed in the context of an existing dependency, not a hypothetical future relationship.
6. UKRAINE: THE TRANSIT ROUTE THAT GERMANY WANTED TO PRESERVE
The most important geopolitical question concerned Ukraine.
For decades, Ukraine’s gas transmission system had provided a major route through which Russian gas reached European customers.
Nord Stream 2 offered an alternative route beneath the Baltic Sea.
That created a potential commercial problem for Ukraine.
If Gazprom could deliver gas to European customers without using Ukrainian pipelines, it might reduce the volume of gas transported through Ukraine.
The consequences extended beyond transit revenue.
Ukraine’s gas network also formed part of the infrastructure supporting European energy security.
Reduced utilisation could make that infrastructure more difficult to maintain.
It could also weaken the importance of Ukraine as a transit country.
These concerns were not speculative inventions made after the invasion.
They were raised formally before the German assessment was completed.
The report records Ukrainian concerns about the possibility that Gazprom could redirect gas flows away from Ukraine.
A particularly important contractual detail concerned the existing Ukrainian transit agreement.
Under the arrangements beginning in 2020, Gazprom had committed to pay for specified minimum transportation capacity.
For 2021–2024, that minimum was 40 billion cubic metres annually.
But the arrangement operated on a ship-or-pay basis.
This meant that the payment obligation did not necessarily require the equivalent physical quantities of gas to be transported through Ukraine.
The distinction mattered.
A company might continue making payments for transportation capacity while using a different route to deliver gas.
Ukraine therefore argued that the existence of a transit contract did not guarantee the long-term survival of the physical gas flows.
Germany acknowledged the importance of maintaining the Ukrainian route.
The ministry’s position was that continued transit through Ukraine remained valuable to European energy-system resilience.
The government supported efforts to preserve a substantial level of transit beyond the expiry of the existing contract in 2024.
Nevertheless, the ministry concluded that the broader European gas system possessed alternative capacity capable of compensating for significant interruptions.
This was a central point of disagreement.
Germany regarded the Ukrainian route as important but not indispensable to meeting the statutory security-of-supply test.
Ukraine regarded the possibility of losing the route as a serious economic and strategic danger.
Both positions were documented before February 2022.
7. AN IMPORTANT COURT JUDGMENT: ENERGY SOLIDARITY WAS A LEGAL OBLIGATION
There was another reason Germany could not examine Nord Stream 2 solely from the perspective of its own national gas supplies.
On 15 July 2021, the Court of Justice of the European Union delivered judgment in Case C-848/19 P, Germany v Poland.
The proceedings concerned the OPAL pipeline.
OPAL was associated with the original Nord Stream infrastructure.
The dispute addressed the European Commission’s decision concerning exemptions affecting access to and regulation of that pipeline.
Poland challenged the decision.
Its case involved the principle of energy solidarity under Article 194(1) of the Treaty on the Functioning of the European Union.
The Court of Justice upheld the application of that principle.
The judgment confirmed that energy solidarity was not merely a political aspiration.
It could impose legal obligations relevant to the assessment of European energy measures.
The implications extended beyond a purely national assessment of gas infrastructure.
Decisions concerning energy markets could require consideration of their consequences for other Member States.
The case did not determine whether Nord Stream 2 AG should receive certification.
Nor did it decide whether Germany’s October 2021 security assessment was correct.
It concerned separate regulatory proceedings.
Nevertheless, the judgment provided important judicial context.
The German ministry’s subsequent assessment addressed the interests of other Member States and the requirement to consider European energy solidarity.
This is significant because the consultation of neighbouring countries was not simply a matter of diplomatic courtesy.
It formed part of the legal framework within which the assessment was undertaken.
Judicial source: Court of Justice of the European Union — Germany v Poland, Case C-848/19 P, 15 July 2021. Infocuria
8. POLAND AND LITHUANIA: THE OBJECTIONS WERE ALREADY ON RECORD
The German ministry consulted other European countries before completing its assessment.
The process included questions concerning the effects of Nord Stream 2 upon existing import routes, alternative supplies and national gas markets.
Poland and Lithuania were among the strongest critics.
Their concerns extended beyond the immediate availability of sufficient gas.
They questioned whether Nord Stream 2 could increase Russian influence over European energy markets.
They also raised the possibility that the new pipeline would displace existing transportation routes rather than provide genuinely additional supplies.
This distinction matters.
A new pipeline might appear to improve resilience by adding physical capacity.
But if its operation caused existing infrastructure to become commercially unviable, the overall network might not become more resilient in the way its supporters anticipated.
Poland also raised questions concerning the consequences for its own customers and gas transportation costs.
Lithuania questioned whether Nord Stream 2 would diversify European supply in any meaningful sense.
The German ministry considered these arguments.
It did not accept that they established a sufficiently concrete threat to security of supply.
The available alternatives, including interconnections and LNG infrastructure, were regarded as important safeguards.
Other countries adopted different positions.
The Czech Republic regarded additional transportation routes as potentially beneficial to security of supply.
The resulting consultation demonstrated that European countries did not have a uniform view of Nord Stream 2.
That disagreement was present in 2021.
It should not be reconstructed retrospectively as though every European government had either supported or opposed the project for identical reasons.
The October assessment acknowledged competing national interests but reached its own conclusion under the applicable German statutory test.
9. THE JULY 2021 GERMAN-AMERICAN AGREEMENT
The German assessment must also be considered alongside an important diplomatic agreement reached three months earlier.
On 21 July 2021, the governments of Germany and the United States issued a joint statement concerning Ukraine, European energy security and climate policy.
The statement addressed the dispute over Nord Stream 2.
Washington had strongly opposed the pipeline.
Berlin continued to support a path towards its completion and operation, subject to applicable legal requirements.
The joint statement attempted to establish a framework for managing the disagreement.
It affirmed the two governments’ commitment to Ukraine’s sovereignty and territorial integrity.
It also addressed the danger of Russia using energy supplies for political purposes.
Germany undertook to support measures against Russia if Moscow attempted to use energy as a weapon or committed further aggression against Ukraine.
The statement also supported continuation of Ukrainian gas transit beyond 2024.
Germany committed to using its influence to facilitate negotiations concerning an extension.
The agreement is important because it demonstrates that the potential geopolitical consequences of Nord Stream 2 were already recognised at government level.
Germany was not unaware of the possibility that Russian gas deliveries could become entangled with foreign policy.
Rather, it was attempting to combine the project’s possible commercial operation with commitments intended to protect Ukraine and European energy security.
Whether those arrangements would prove sufficient remained uncertain.
The agreement did not guarantee that Russia would honour the expectations underlying it.
Nor did it bind Nord Stream 2 AG to commence commercial operation irrespective of German law.
The July statement demonstrates that geopolitical risk was being addressed through diplomacy even while the German regulatory process continued.
Authenticated diplomatic record: US Department of State — Joint US-German Statement, 21 July 2021. U.S. Department of State
10. DECEMBER 2021: UKRAINE ASKS GERMANY TO RECONSIDER
The objections did not end with the October assessment.
On 17 December 2021, Ukraine’s Gas Transmission System Operator sent a letter to Germany’s Federal Ministry for Economic Affairs.
The company announced the correspondence publicly on 22 December.
Its chief executive, Sergiy Makogon, argued that Nord Stream 2 endangered European energy security.
The Ukrainian operator disputed the favourable conclusion reached by Germany’s previous government.
It asked the new ministry to reconsider the risks.
The correspondence was particularly significant because Germany had undergone a change of government.
Robert Habeck had become Federal Minister for Economic Affairs and Climate Action.
The Ukrainian company therefore addressed its concerns to the administration now responsible for the certification-related security assessment.
GTSOU maintained that Nord Stream 2 could weaken Ukraine and other countries by reducing their importance within European gas transportation arrangements.
It also questioned the commercial justification for the pipeline.
These were the company’s stated positions.
They were not findings by a court.
The evidence nevertheless establishes that Ukraine formally sought reconsideration of Germany’s earlier assessment before the events of February 2022.
This is an important chronological point.
The request to reconsider Nord Stream 2’s security implications preceded Russia’s full-scale invasion.
It demonstrates that the argument about European vulnerability was already being made by an identifiable party with direct commercial and national interests.
The available announcement does not establish that the Ukrainian letter, by itself, caused Germany’s subsequent withdrawal of the assessment.
The German government’s February statement identified the changed geopolitical and market circumstances as the reason for its decision.
But the December correspondence belongs in the historical record.
It shows that concerns about the earlier assessment were being actively pursued.
Original corporate evidence: GTSOU — Letter to German Ministry Concerning Nord Stream 2 Security Risks, 22 December 2021. Tsoua
11. THE CERTIFICATION PROCESS WAS ALREADY SUSPENDED
There is another important distinction.
By December 2021, the Nord Stream 2 certification process was already suspended.
The Bundesnetzagentur had announced that suspension on 16 November.
As examined in yesterday’s instalment, the immediate reason concerned the legal structure of the proposed operator.
Nord Stream 2 AG was incorporated in Switzerland.
The regulator concluded that the operator responsible for the German section needed to be organised under German law.
The project company proposed establishing a German subsidiary.
It would need to transfer essential assets and personnel and demonstrate compliance with the relevant independence requirements.
The resulting suspension was procedural.
It was not a final rejection of certification.
It also did not mean that the October security-of-supply assessment had been withdrawn.
That assessment remained part of the regulatory record.
These different stages must be kept separate.
October 2021: The economy ministry completed a favourable security-of-supply assessment.
November 2021: The Bundesnetzagentur suspended operator certification because of the applicant’s legal structure.
December 2021: Ukraine’s gas transmission operator requested reconsideration of the security assessment.
January 2022: Nord Stream 2 AG announced the establishment of its German subsidiary, Gas for Europe GmbH.
February 2022: The German government withdrew the October security assessment.
The sequence demonstrates that several distinct legal and administrative processes were unfolding.
The November suspension did not render the February withdrawal unnecessary.
The February withdrawal introduced a separate obstacle to certification.
Official regulatory record: Bundesnetzagentur — Nord Stream 2 Certification Proceedings BK7-21-056 and Bundesnetzagentur — Suspension Announcement, 16 November 2021. Bundesnetzagentur
12. 22 FEBRUARY 2022: THE DECISIVE REVERSAL
On 22 February 2022, the German government announced that Nord Stream 2’s certification could no longer proceed.
The immediate context was Russia’s recognition of the separatist-controlled regions of eastern Ukraine.
Chancellor Olaf Scholz announced that the situation had fundamentally changed.
He instructed the economy ministry to withdraw its earlier assessment of security of supply.
Robert Habeck confirmed the action.
The official ministry statement explained that the previous government’s report had been withdrawn in a letter sent that morning to the Bundesnetzagentur.
It also explained the legal consequence.
Until the security-of-supply assessment was updated, the regulator could not issue a favourable certification decision.
The ministry identified two principal considerations.
One was the situation in the German and European gas markets during the winter.
The other was the deterioration of the geopolitical situation.
Russia’s actions in eastern Ukraine were central to the latter.
The German government regarded those developments as requiring a new assessment of the implications of Nord Stream 2.
This was not an announcement that the pipeline had failed a technical safety inspection.
Nor was it a court decision declaring the original assessment unlawful.
The government withdrew a previously favourable administrative assessment because it considered the underlying circumstances to have changed substantially.
That distinction is essential.
The October report had been based upon the information and forecasts available in 2021.
The February decision reflected developments that the new government regarded as materially affecting security of supply.
The official statement also confirmed that the relevant legal framework permitted an assessment to be reconsidered when substantial changes occurred.
Germany did not simply announce a different political preference. It used an identified administrative step to prevent a favourable certification decision while the security implications were reassessed.
Authenticated primary source: German Federal Ministry for Economic Affairs — Robert Habeck’s Announcement, 22 February 2022. Economic Affairs Ministry
13. THE TWO-DAY DISTINCTION: BEFORE AND AFTER THE FULL-SCALE INVASION
The exact dates are important.
Russia recognised the separatist-controlled territories in eastern Ukraine on 21 February 2022.
Germany withdrew the favourable Nord Stream 2 assessment on 22 February.
Russia launched its full-scale invasion of Ukraine on 24 February.
It would therefore be inaccurate to describe Germany’s withdrawal as a decision taken after the full-scale invasion.
The withdrawal preceded it.
The February decision was a response to Russia’s escalating actions, including the recognition of the territories and the resulting deterioration in international security.
The invasion two days later created a much more extensive crisis.
It also transformed the commercial decisions facing European energy companies.
For Shell, the consequences would become explicit within days.
On 28 February, the company announced its intention to end involvement in Nord Stream 2 and withdraw from several Russian joint ventures.
The progression from diplomatic confrontation to corporate withdrawal was rapid.
But the documentary chronology establishes that Germany’s certification reversal occurred before the invasion.
This is important when examining the actions and responsibilities of the different participants.
Germany’s 22 February decision was a government response to an escalating security crisis.
Shell’s 28 February announcement followed the invasion itself.
These decisions were related through the broader geopolitical circumstances.
They were not the same event.
Contemporaneous reporting: The Guardian — Germany Halts Nord Stream 2 Approval, 22 February 2022 and S&P Global — Germany Says Certification Cannot Proceed, 22 February 2022. The Guardian
14. THE SHELL CONNECTION: THE ORIGINAL FINANCING AND THE EVENTUAL LOSS
Shell’s financial involvement was established in April 2017.
The company signed a financing agreement with Nord Stream 2 AG alongside ENGIE, OMV, Uniper and Wintershall.
Each company committed financing and guarantees worth up to approximately €950 million.
Gazprom remained the sole shareholder of Nord Stream 2 AG.
Shell’s participation was therefore principally financial, not an equity stake in the pipeline company.
Its original announcement described a €285 million long-term funding facility and up to €665 million in additional potential financing and guarantees.
The company subsequently confirmed that its final Nord Stream 2 loan instalments had been made during the second quarter of 2020.
By October 2021, Shell was already financially exposed to the outcome of the project’s certification process.
The German ministry’s favourable assessment was relevant to that process.
But it did not guarantee repayment of Shell’s loan.
Nor did it guarantee that the Bundesnetzagentur would ultimately certify the proposed operator.
The subsequent events demonstrated how quickly the project’s circumstances could change.
On 28 February 2022, Shell announced its intention to end involvement in Nord Stream 2 and withdraw from Russian ventures.
The announcement also addressed its interests in Sakhalin-2, Salym Petroleum Development and Gydan.
These were different investments, with different ownership and contractual arrangements.
They should not be treated as interchangeable.
Shell’s later SEC-filed financial results confirmed that the company had written down its Nord Stream 2 loan in full during the first quarter of 2022.
The amount was $1.126 billion.
That was an accounting write-down of a financial asset.
It was not a sanctions fine.
Nor was it a judicial award of damages.
The company’s original financing agreement did not automatically give it control over the German regulator’s decisions or the conduct of the Russian government.
The available documents also do not establish that Shell had access to every internal German government assessment before publication.
Those limitations matter.
But the financial consequence is established.
Shell had advanced substantial financing to a Gazprom-owned project that never entered commercial operation before the events of February 2022 transformed its prospects.
Authenticated corporate sources: Shell — Original Nord Stream 2 Financing Announcement, 24 April 2017; Shell — Russian Withdrawal Announcement, 28 February 2022; and Shell — SEC-Filed First Quarter 2022 Results. Shell
15. WHAT THE ORIGINAL REPORT REVEALS — AND WHAT IT DOES NOT
The 54-page German assessment is valuable because it records the reasoning behind a consequential government conclusion.
It demonstrates that officials were aware of Russian state control over Gazprom.
It shows that earlier interruptions to Russian gas supplies formed part of the examination.
It records objections from countries concerned about their dependence upon Russian energy.
And it identifies the importance of the Ukrainian gas transportation system.
These matters were not absent from the assessment.
The ministry considered them and reached a favourable conclusion under the applicable statutory framework.
That conclusion was subsequently withdrawn.
But the withdrawal does not automatically establish that the original assessment was fraudulently prepared.
Nor does it establish that the officials responsible deliberately ignored known evidence.
Those would be serious allegations requiring different proof.
Equally, the existence of the original favourable assessment does not establish that the ministry’s assumptions were correct.
The document is evidence of the government’s analysis and judgment at the time.
It is not a guarantee of the accuracy of every underlying forecast.
The subsequent historical record permits those assumptions to be examined critically.
That is particularly true of the expectations concerning Russian gas deliveries, transit through Ukraine and the resilience of European gas markets.
The central distinction is between what was considered foreseeable in October 2021 and what occurred during the crisis of 2022.
A documentary archive should preserve both.
The original assessment establishes the government’s reasoning. The February withdrawal establishes that the government no longer considered the earlier conclusion adequate under the changed circumstances.
Neither document should be interpreted in isolation.
DOCUMENTARY FINDINGS
ESTABLISHED FACTS
On 26 October 2021, Germany’s Federal Ministry for Economic Affairs and Energy completed a 54-page security-of-supply assessment concerning Nord Stream 2.
The assessment was prepared under Section 4b of Germany’s Energy Industry Act.
It concluded that certification would not create the security-of-supply danger contemplated by the statutory test.
The ministry considered Russia’s control of Gazprom, the European gas market, alternative supply arrangements and the implications for neighbouring countries.
The assessment acknowledged previous interruptions to Russian gas supplies.
It examined objections raised by Poland, Lithuania and Ukraine.
It recognised the importance of maintaining Ukrainian gas transit.
The report was favourable to certification on security-of-supply grounds.
It was not final certification of Nord Stream 2 AG.
On 16 November 2021, the Bundesnetzagentur suspended the separate operator-certification procedure because of the proposed operator’s legal structure.
On 17 December 2021, Ukraine’s Gas Transmission System Operator sent Germany’s economy ministry a letter requesting reconsideration of the earlier security assessment.
The Ukrainian company announced the correspondence publicly on 22 December.
On 22 February 2022, Germany withdrew the October 2021 assessment.
The official reason concerned changed geopolitical and gas-market circumstances, particularly Russia’s actions in eastern Ukraine.
Without a valid favourable assessment, the Bundesnetzagentur could not issue a positive certification decision.
Russia launched its full-scale invasion of Ukraine on 24 February 2022.
On 28 February, Shell announced its intention to end involvement in Nord Stream 2 and withdraw from several Russian ventures.
Shell subsequently recognised a full write-down of its Nord Stream 2 loan amounting to $1.126 billion.
The complete October 2021 German assessment was made publicly available in October 2022.
DOCUMENTED POSITIONS AND CONTESTED INTERPRETATIONS
The German economy ministry concluded in October 2021 that the available evidence did not establish a sufficiently concrete security-of-supply danger arising from certification.
Poland and Lithuania expressed concerns about greater dependence upon Russia, competition and displacement of existing transportation routes.
Ukraine argued that Nord Stream 2 could weaken its gas transit system and undermine wider European energy security.
The German ministry regarded existing market safeguards and alternative infrastructure as important protections.
Ukraine’s gas transmission operator continued challenging the favourable assessment in December 2021.
The German government concluded in February 2022 that the earlier assessment required reconsideration because the geopolitical and market circumstances had changed.
These are documented positions.
The existence of competing assessments does not establish that every allegation advanced by either side was correct.
MATTERS NOT ESTABLISHED
The examined documents do not establish that Shell directed Germany’s October 2021 assessment.
They do not establish that Shell controlled Nord Stream 2 AG’s German certification application.
They do not establish that Shell obtained confidential German government documents through improper means.
They do not establish that German officials deliberately falsified their October assessment.
They do not establish that the Bundesnetzagentur had approved the pipeline for commercial operation before February 2022.
They do not establish that Ukraine’s December letter independently caused Germany’s February withdrawal.
They do not establish that Shell violated American or European sanctions legislation.
They do not establish that Shell’s directors concealed material risks from shareholders.
And they do not establish that the withdrawal of the German assessment, considered independently, caused the eventual $1.126 billion loan write-down.
The financial loss occurred within a substantially broader sequence of geopolitical and commercial developments.
EDITORIAL COMMENTARY: THE LIMITS OF A FAVOURABLE GOVERNMENT ASSESSMENT
The German security assessment illustrates an important problem in international energy policy.
Infrastructure can strengthen a transportation system while simultaneously increasing dependence upon a particular supplier.
The two effects are not mutually exclusive.
Nord Stream 2 would have provided additional physical capacity for delivering Russian gas to Europe.
That capacity could have reduced reliance upon particular transportation corridors.
But it would not have changed the identity of the principal supplier.
Gazprom remained central to the project.
The Russian state controlled Gazprom.
The distinction between transportation resilience and supplier concentration was therefore fundamental.
The 2021 assessment placed substantial weight upon Europe’s existing safeguards.
These included interconnected gas networks, LNG facilities, alternative suppliers and regulatory oversight.
The ministry concluded that those mechanisms were sufficient to prevent the certification from creating the relevant statutory danger.
Poland and Ukraine questioned that conclusion.
Their concerns extended beyond the physical availability of pipes.
They involved the commercial and strategic consequences of giving Russia greater freedom to choose how its gas reached European customers.
The later historical record demonstrates why the distinction mattered.
But hindsight must be handled carefully.
It is legitimate to examine whether the assumptions in the October 2021 report were sufficiently robust.
It is legitimate to question whether the analysis gave adequate weight to geopolitical risk.
It is also legitimate to examine whether Germany’s dependence upon Russian gas had become excessive.
Those are questions for historical and policy analysis.
They are not, without additional evidence, proof of dishonesty or illegality.
There is another lesson concerning the significance of government approval.
A favourable assessment can form an important part of an investment’s commercial prospects.
But it does not eliminate every future risk.
Regulatory decisions may be subject to further conditions.
Governments may reconsider assessments when circumstances change.
International relationships may deteriorate.
And projects dependent upon foreign governments or state-controlled companies may face risks outside the direct control of their financiers.
Shell’s Nord Stream 2 experience illustrates those vulnerabilities.
The company committed financing in 2017.
By 2020, its final loan instalments had been made.
Construction was completed in 2021.
The German economy ministry issued a favourable security assessment.
But operator certification remained unfinished.
Then Russia’s actions in February 2022 transformed the situation.
Shell’s eventual financial loss demonstrates the consequences of exposure to a major project whose commercial success depended upon decisions by several governments and regulators.
It does not establish that every adverse development could have been anticipated or prevented.
Nor does it eliminate the need to examine how the original risks were assessed.
For shareholders, the historical question is not simply whether the investment produced a loss.
It is whether the decisions were made with an adequate understanding of the risks reasonably identifiable at the time.
That question requires internal corporate evidence not contained in the public government documents examined here.
The independent archive can nevertheless establish the external circumstances.
It can identify the warnings issued by governments and other interested parties.
It can preserve the original financing agreements.
And it can document the decisions that eventually prevented the project from operating.
The German assessment is particularly important because it captures official expectations shortly before those expectations changed.
Its authors anticipated that European energy systems could withstand significant disruption.
They recognised the importance of continued Ukrainian gas transit.
And they concluded that certifying Nord Stream 2 did not present the specific danger contemplated by German law.
Four months later, the German government withdrew that conclusion.
The historical lesson is not that every official forecast is unreliable. It is that a forecast remains conditional upon assumptions that may change — sometimes with extraordinary consequences.
That is why the original documents deserve to be preserved.
The October 2021 assessment and the February 2022 withdrawal are both part of the evidential record.
Together, they reveal how Germany’s official judgment of Nord Stream 2’s security implications changed at a decisive moment in European history.
For Shell, the consequences were commercial and financial.
For Ukraine, the stakes extended far beyond commercial gas transportation.
And for Europe, the events raised fundamental questions about the relationship between energy infrastructure, economic dependence and national security.
The documents establish what Germany concluded, what Ukraine challenged and why the earlier conclusion was withdrawn.
They also provide a foundation for examining the consequences without substituting retrospective assumptions for contemporary evidence.
SOURCE RECORD AND DOCUMENTARY PROVENANCE
The following authenticated records and contemporaneous reports provide the principal evidential foundation for this instalment.
1. German Federal Ministry for Economic Affairs — 26 October 2021
Security-of-Supply Assessment under Section 4b of the Energy Industry Act.
The central 54-page primary document.
Examines the proposed Nord Stream 2 operator, Russian state control, European gas imports, Ukrainian transit, the concerns of neighbouring countries and the ministry’s overall security assessment.
Read the original 54-page German government assessment
2. German Federal Ministry for Economic Affairs — October 2022
Official Publication of the 2021 Security Assessment.
The ministry’s published record confirming the availability of the original assessment.
German Ministry — Published Assessment Archive
3. FragDenStaat — 26 October 2021 to October 2022
Information Request Concerning the Nord Stream 2 Security Assessment.
Documents the request for access to the original government report and the subsequent correspondence concerning its public release.
FragDenStaat — Original Information Request and Correspondence
4. Court of Justice of the European Union — 15 July 2021
Case C-848/19 P, Germany v Poland.
Judgment concerning energy solidarity and the regulation of the OPAL pipeline.
Included as judicial context concerning the obligations to consider the energy interests of other European Union Member States.
The case did not determine the validity of the October 2021 Nord Stream 2 assessment.
Court of Justice — Original Case Record
5. Governments of Germany and the United States — 21 July 2021
Joint Statement on Support for Ukraine, European Energy Security and Climate Goals.
Authenticated diplomatic agreement addressing Russian energy policy, protection of Ukraine and the continuation of Ukrainian gas transit.
US Department of State — Original German-American Agreement
6. Bundesnetzagentur — 2021
Nord Stream 2 Certification Proceedings, BK7-21-056.
Official regulatory case record establishing the certification timetable, participation of Polish and Ukrainian companies and the November 2021 suspension.
German Federal Network Agency — Certification Case Register
7. Bundesnetzagentur — 16 November 2021
Certification Procedure for Nord Stream 2 Suspended.
Original regulatory announcement explaining the legal-structure requirements and the conditions for resumption.
German Regulator — Original Suspension Announcement
8. Gas Transmission System Operator of Ukraine — 22 December 2021
Letter to the German Ministry Concerning the Security Risks of Nord Stream 2.
Contemporaneous corporate announcement confirming the correspondence dated 17 December and the request to reconsider the earlier German assessment.
GTSOU — Original Ukrainian Statement
9. German Federal Ministry for Economic Affairs and Climate Action — 22 February 2022
Minister Habeck Comments on the Situation in Eastern Ukraine and the Discontinuation of the Nord Stream 2 Certification Procedure.
The decisive authenticated government document.
Confirms the withdrawal of the October 2021 security assessment, identifies the changed circumstances and explains the legal effect upon certification.
German Ministry — Original February 2022 Announcement
10. The Guardian — 22 February 2022
Germany Halts Nord Stream 2 Approval Over Russian Recognition of Ukrainian Separatist Territories.
Contemporaneous reporting of Chancellor Scholz’s announcement, Germany’s reasons and the international response.
The Guardian — Contemporary Report, 22 February 2022
11. Royal Dutch Shell plc — 24 April 2017
Shell and Four European Energy Companies Sign Financing Agreements with Nord Stream 2 AG.
Authenticated Shell corporate announcement establishing the original financing arrangements and Gazprom’s ownership.
The announcement appears on page 40 of Shell’s consolidated 2017 press releases.
Shell — Original 2017 Corporate Press Release
12. Shell plc — 28 February 2022
Shell Intends to Exit Equity Partnerships Held with Gazprom Entities.
Authenticated corporate announcement confirming Shell’s intention to end involvement in Nord Stream 2 and withdraw from its Russian joint ventures.
Shell — Official Russian Withdrawal Announcement
13. Shell plc — First Quarter 2022
Financial Results Filed with the US Securities and Exchange Commission.
Authenticated SEC filing confirming Shell’s full $1.126 billion Nord Stream 2 loan write-down.
Also records the separate financial consequences involving other Russian assets.
Shell — SEC-Filed First Quarter 2022 Financial Results
DOCUMENTARY DISCLAIMER
This instalment distinguishes authenticated government documents, statutory provisions, judicial findings, corporate disclosures and contemporaneous reporting from allegations, contested interpretations and editorial commentary.
The October 2021 German security-of-supply assessment was a formal administrative evaluation undertaken under the applicable German legislation. It was not final regulatory certification of Nord Stream 2 AG.
The assessment acknowledged Russian state control of Gazprom and considered concerns raised by Ukraine, Poland and other European countries. Its favourable conclusion did not amount to a guarantee of Russia’s future conduct.
Germany’s withdrawal of the assessment on 22 February 2022 was an official response to changed geopolitical and market circumstances. The withdrawal preceded Russia’s full-scale invasion of Ukraine on 24 February.
The Court of Justice judgment discussed in this instalment concerned the separate OPAL pipeline dispute and the principle of European energy solidarity. It did not determine the validity of the October 2021 security assessment.
No allegation is made that Shell influenced the preparation of the German assessment, controlled the certification proceedings, violated applicable law or concealed material information.
The public documents do not establish that the February withdrawal independently caused Shell’s eventual $1.126 billion loan write-down.
The German government’s original report, subsequent withdrawal and Shell’s financial disclosures are treated as separate but historically connected records.
Further authenticated evidence, factual corrections and responses from Shell, the German authorities, Ukrainian and Polish energy companies and other relevant parties remain welcome.
The website’s general disclaimer also applies.
NEXT IN THE SHELL LEAKS FILES
SLF-2007-102 — The Sakhalin Papers XCII: The Russian Exit — Shell’s 28 February 2022 Announcement and the Financial Reckoning
The next instalment will examine the immediate consequences of Russia’s full-scale invasion of Ukraine for Shell’s investments in Russia.
On 24 February 2022, Russian forces launched their invasion.
Four days later, Shell announced that it intended to end its involvement in Nord Stream 2 and withdraw from several ventures involving Gazprom and related entities.
The announcement marked a major change in the company’s relationship with Russia.
It also brought together two strands of this documentary archive.
The first concerns Shell’s long involvement in the Sakhalin-2 oil and LNG development.
The second concerns its financing of Nord Stream 2.
Both relationships involved Gazprom.
But the commercial arrangements were different.
Shell held a 27.5% equity interest in Sakhalin-2.
It was one of five European financiers of Nord Stream 2, not an equity shareholder in that pipeline company.
Shell’s 28 February announcement addressed both.
The next investigation will examine the original corporate announcement, contemporary reporting, Shell’s subsequent SEC filings and the financial consequences recognised during 2022.
It will distinguish the different forms of investment and the separate accounting consequences.
The documentary record already establishes two major amounts.
Shell recognised a $1.126 billion write-down of its Nord Stream 2 loan.
It also recognised a substantial impairment relating to Sakhalin-2.
But the financial figures represent different assets and contractual relationships.
They should not be combined without understanding the underlying accounting treatment.
The next instalment will also examine the statements made by Shell’s then chief executive, Ben van Beurden, and the company’s explanation of its withdrawal.
The objective will be to establish what Shell announced, what the company subsequently recorded in its financial statements and what remained unresolved.
There is another question of particular importance for shareholders.
How did investments developed over many years, and repeatedly defended on commercial grounds, become liabilities requiring major write-downs within weeks of Russia’s invasion?
The answer requires more than a retrospective description of the war.
It requires examining the contracts, financial disclosures, management statements and circumstances that preceded the decision.
That will be the focus of the next investigation.
In October 2021, Germany concluded that Nord Stream 2 certification did not threaten gas security.
In February 2022, Germany withdrew that conclusion.
Six days later, Shell announced that it intended to leave the project.
The Sakhalin Papers continue.
*This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, and shellwikipedia.com, are owned by John Donovan - more information here. There is also a Wikipedia segment, the Shell DPA Files, "Shell and the Spies", the Shell Leaks files, the Independent Shell Archive, as well as books written and published by John Donovan - Kindle eBooks. Timeline of the Donovan Shell Feud. Toxic History of Royal Dutch Shell Group. Shell and the Donovans: The Full Media Record — 550+ Articles, 110 Books, 40 Years. *All conjured up by internet wizz, Nick Gill.
