Nordstream 2 pipeline bankrupt after Russian sanctions
The gas pipeline linking Russia to Germany had its certification postponed in February. Now, the company behind it has filed for bankruptcy.
Nord Stream 2 AG, the operator behind the controversial gas pipeline under the Baltic Sea, has fired all of its staff and filed for bankruptcy.
The Swiss-based company was one of the first targets of major sanctions against Russia and was proof of Germany's commitment to hit Russia economically, despite the damage it would cause to itself. Now, the project lies in tatters after costing billions and reaping no benefits.
The bankruptcy will likely drive natural gas prices even higher as global markets continue to fluctuate on news of the Russian war against Ukraine.
Reuters broke the story earlier on Wednesday, citing two anonymous sources that had told the news agency that the company had been speaking with financial advisers to begin insolvency proceedings.
Despite Nord Stream 2 AG going bankrupt, the real power behind the project was Russian gas giant Gazprom. The state-run company paid half the cost of building Nord Stream 2, with the remainder of the $11 billion pipeline project financed by British oil and gas major Shell, Austria's OMV, France's Engie and Germany's Uniper and Wintershall DEA.
Gazprom has been on the receiving end of major sanctions in the past week which has seen governments and international bodies cut ties with the embattled company.
What will this mean for gas prices?
The price of oil and gas has increased significantly since the beginning of the conflict. On Monday morning, the price of natural gas rocketed up 12 percent on morning trading in the UK. The price of 252p is six times higher than a year ago, but down significantly from the 450p from before Christmas.
European markets also saw 13 percent increases in gas prices. The formal bankruptcy of Nord Stream 2 AG is likely to push prices up further when markets reopen on Wednesday morning.