Germany’s energy regulator Federal Network Agency (BNetzA) has suspended certification for the $11bn Nord Stream 2 gas pipeline intended to transport Russian gas to Europe through the Baltic Sea.

The gas export pipeline is owned and operated by Swiss-based Nord Stream 2, a wholly owned subsidiary of Russia’s Gazprom.

The decision to temporarily suspend the certification has been taken as the pipeline operating company had not complied in ‘properly setting up a subsidiary’ in a legal form under German law, Germany’s energy regulator said.

The company is required to create a subsidiary to own and operate the German part of the 55 billion cubic metre (bcm) pipeline.

However, Nord Stream 2 decided to launch a subsidiary under German law only to govern the German portion of the project instead of ‘transforming its existing legal form’.

Bundesnetzagentur said in a statement: “Following a thorough examination of the documentation, the Bundesnetzagentur concluded that it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organised in a legal form under German law.

“Nord Stream 2 AG, which is based in Zug (Switzerland), has decided not to transform its existing legal form but instead to found a subsidiary under German law solely to govern the German part of the pipeline.

“This subsidiary is to become the owner and operator of the German part of the pipeline.”

Suspension of the certification procedure will be effective until the pipeline company transfers main assets and human resources to the new Germany subsidiary.

Construction is already complete on the pipeline project, which has been facing opposition from some European countries and the US over concerns that it could make Europe dependent on Russia’s natural gas.

Last month, Polish state-controlled oil and gas company PGNiG claimed that the Nord Stream 2 pipeline would pose risks for gas supply security to the European Union (EU).

Commenting on Germany’s decision, PGNiG management board president Paweł Majewski said: “The BnetzA decision confirms the effectiveness of the PGNiG Group’s legal efforts. The German regulator agreed with our position that Nord Stream 2 AG, as a company under Swiss law, cannot serve as a transmission system operator.”

The Nord Stream 2 pipeline starts from eastern Russia and passes through Finnish, Swedish and Danish waters before terminating near the German coast of the Baltic Sea.