The Nord Stream 2 Pipeline is aimed at shipping natural gas from Russia to Germany under the Baltic Sea. The business project is 95 percent finished —but the battle over the gas link is far from over. It has turned into a massive diplomatic problem for Washington, Berlin, Brussels, Warsaw, and many other capitals.
A lot of questions are being raised as the Nord Stream pipeline is reaching the end of its construction. U.S. President Joe Biden’s administration has begun to discuss blocking its completion. Germany’s pro-Nord–Stream–2 position may shift after the upcoming elections. The EU’s ability to effectively respond to Russia’s military buildup near Ukraine is also questioned. European reliance on Moscow is extremely crucial for energy source.
Construction of the Nord Stream 2 Pipeline would wrap up this fall. Only about 120 kilometres of pipe are left to be laid in two parallels including 93 kilometres in Danish water and 28 kilometres in German waters. By September, the work in Danish waters are expected to wrap up. However, pipe-laying in Germany has been administratively frozen due to complaints brought by environmental NGOs.
Many Believe that the construction of the Nord Stream 2 Pipeline is too late to stop. James Huckstepp, gas analyst at S&P Global Platts says that “The recent escalation of military activity in Donbas and subsequent phone call from [U.S. President] Joe Biden to Ukraine are unlikely to result in increased U.S. sanctions that could further significantly slow the pipeline construction”.
Once finished, Nord Stream 2 will need to find a certifier willing to check the pipeline for safety. A previous company suspended work in January out of fear of U.S. sanctions because of Trump’s administration. Huckstepp estimated gas could start flowing through Nord Stream 2 as soon as late 2021.
Due to EU rules mandating that third parties also be allowed to ship gas through connecting pipelines. “Nord Stream and Nord Stream 2 combined will likely be limited to operating at about 75 percent capacity” says Huckstepp. 82 billion cubic meters (bcm) of gas per year is flowing to Europe through the two Nord Stream pipelines; Germany alone imports around 100 bcm of natural gas each year.
Biden is facing pressure from lawmakers in both parties to impose mandatory sanctions on the pipeline. The Justice Department has internally approved two sanctions packages. One against the Switzerland-based Nord Stream 2 AG company owned by Russia’s Gazprom, and one against Nord Stream 2 CEO Matthias Warnig. Biden has so far held back.
Biden hasn’t formally invoked his right to waive sanctions if deemed in the national interest. Republicans have been the loudest critics. Texas Senator Ted Cruz, is accusing the Biden administration of being “soft on Russia.”
On the Democratic side, Senate Foreign Relations Committee Chairman Robert Menendez and Senator Jeanne Shaheen penned a letter to Secretary of State Antony Blinken. “Full diplomatic push by the State Department to stop Nord Stream 2″. If no action materializes by summer, pro-sanctions lawmakers are considering inserting amendments into the 2022 defense spending bill.
Germany’s new political party
German parliamentary elections take place September 26. The fiercely anti-pipeline Green Party has surged to second place in national polls at 22 percent. If the German Greens are part of any new coalition government, they would be in a position to press for a shift in policy on Nord Stream 2.
Angela Merkel, German politician, who will not run for reelection, has long insisted that Nord Stream 2 is a business and not a political project. Newly elected Christian Democratic Union party leader Armin Laschet who hopes to succeed as chancellor, doesn’t want a change in the government’s position. Others in the party have called for a halt on Nord Stream 2.
Before the first Nord Stream pipeline came online in 2011, Russia sent about two-thirds of its European gas exports through Ukraine. That fell to a 40 percent share or 74 bcm in 2019, falling further to 38 bcm in 2020 as the pandemic lockdowns mainly impacted gas imported via Ukraine.
The first Nord Stream is now the top supply route. If the Nord Stream 2 halts, its additional annual capacity of 55 bcm could further sideline Ukraine. However, the Ukrainian route would be temporarily boosted if both Nord Streams are forced to be underused for several years due to regulatory or other constraints.
EU impacts on the gas markets
The European Union gets about a third of its natural gas from Russia, and Gazprom’s supply is the cheapest on the market. Some experts anticipate a surge in EU consumption through 2030 as countries switch from coal to gas in a bid to cut greenhouse gas emissions—which could benefit Russia as domestic EU gas production drops.
Josep Borrell, the EU’S Foreign Policy Chief said that his administration pledges to end reliance on fossil fuels and become climate neutral by 2050.
Kremlin views on the pipeline
Stopping Nord Stream 2 at this late stage could hand Putin a weapon to whip up anti-Western sentiment and prompt a wave of litigation from involved companies, he warned. The pipeline is much more than a simple business project for Russian President Vladimir Putin.