The $12 billion pipeline is set to double supplies of cheap natural gas from Russia to Germany but has been dogged by delays and drawn fierce criticism from allies.

The 1,200-km-long pipeline will be able to ship around 55 billion cubic metres of gas annually from Russia to Europe.
The 1,200-km-long pipeline will be able to ship around 55 billion cubic metres of gas annually from Russia to Europe. (Reuters)

Germany's energy regulator has suspended the approval process for a major new pipeline, Nord Stream 2, bringing Russian gas into Europe, throwing up a new roadblock to the contentious project and driving up regional gas prices.

The regulator said it had temporarily halted the certification process because the Swiss-based consortium behind Nord Stream 2 first needed to form a German subsidiary company under German law to secure an operating licence.

Benchmark European gas prices jumped more than 10 percent higher on the announcement, adding to jitters on a continent already facing soaring energy bills, with winter fast approaching.

Critics have in recent weeks accused Moscow of intentionally limiting gas supplies to Europe and driving up prices in an effort to hasten the launch of Nord Stream 2, a claim Russia denies.

READ MORE: Russia comes to Europe's rescue amid energy crisis

US, EU criticism

The $12 billion project has for years been dogged by delays and drawn fierce criticism from Germany's eastern European Union allies like Poland and the United States.

The Baltic Sea pipeline is set to double supplies of cheap natural gas from Russia to Germany, which the EU's top economy says is needed to help it transition away from coal and nuclear energy.

But opponents say the recently completed pipeline will increase Europe's energy dependence on Russia, which already provides a third of Europe's gas.

Crucially, the pipeline also bypasses Ukraine's gas infrastructure, depriving that country of much-needed transit fees.

Washington has called the project a "bad deal for Europe".

READ MORE: Ukraine calls Russia's gas pipeline 'dangerous geopolitical weapon'

Delay

The pipeline was finally completed in September but is waiting for the approval process to be completed before it can go online.

Like its Nord Stream 1 predecessor, the 1,200-kilometre-long pipeline will be able to ship around 55 billion cubic metres of gas annually from Russia to Europe, with Germany as the main transit hub.

Germany's energy regulator has four months, until January 8, to give its green light for Nord Stream 2.

After that, the European Commission still needs to give its recommendation.

Germany's Economy Ministry said the suspension was "purely regulatory" and that "if the requirements are met, the regulator can continue its review within the remaining four-month period".

READ MORE: Russia's Gazprom completes Nord Stream 2 gas pipeline construction

Source: AFP