German natural gas pipeline operator Wingas Transport GmbH & Co. KG Wednesday confirmed it has shelved plans to build a EUR600-million natural gas pipeline in southern Germany, citing "increasing regulatory intervention."
In a written statement, the unit of BASF SE's (BAS.XE) Wintershall AG said it has stopped planning the construction of the 500-kilometer pipeline, named SEL, with immediate effect.
The company said the existing regulatory regime doesn't provide for a sustainable and longer-term economic expansion of the transmission gas pipeline network.
The comments refer to a decision by the country's network regulator, the Bundesnetzagentur, in September to that transmission gas grids should in future be regulated due to the current lack of competition.
A spokesman for the Bundesnetzagentur said the regulator can't understand Wingas' argument such pipeline projects are uneconomic.
"We've recently granted return on equity rates of 9.29% for new as pipelines and think this is an attractive yield in the current financial market environment," he said.
Wingas was planning to build the SEL pipeline with E.ON Ruhrgas AG, a unit of E.ON AG (EOAN.XE).
Wingas, a 50-50 joint-venture between BASF SE's (BAS.XE) Wintershall AG and Russian gas monopoly Gazprom OAO (GAZP.RS), is planning to build other pipelines elsewhere in Germany and a spokesman said these plans are unaffected.