Energy News Today

Why the World Worries About Russia’s Natural Gas Pipeline

1. What is Nord Stream 2?

It’s a planned 1,230-kilometer (764-mile) pipeline that will carry natural gas from Russian fields to the European network in northern Germany. It will double the capacity of an existing undersea route — the original Nord Stream — that opened in 2011. Russia’s Gazprom PJSC owns the project, with Royal Dutch Shell Plc and four other investors including Germany’s Uniper SE and Wintershall AG providing half of the 9.5 billion-euro ($10.6 billion) cost. Initially expected to come online by the end of 2019, the link has faced delays due to U.S. sanctions that forced Swiss contractor Allseas Group SA to withdraw its pipelaying vessels. Denmark, in whose waters the construction work is to be done, has been reviewing Nord Stream 2’s request to deploy new vessels.

Before the first Nord Stream opened, Russia was sending about two-thirds of its gas exports to Europe through pipelines in Ukraine, a nation with which it has had tense (or worse) relations since the Soviet Union collapsed. That left Gazprom exposed to disruptions. A pricing dispute prompted Russian leaders to halt gas flows through Ukraine for 13 days in 2009. Since then, relations between the two countries have worsened, culminating in the Ukrainian popular revolt that kicked out the country’s pro-Russian president and led to Russia seizing the Crimean Peninsula. The Nord Stream projects are just one part of Gazprom’s decades-long effort to diversify its export options to Europe. Russia expects European gas demand to increase as some nations move away from nuclear and coal power and as their domestic gas production decreases.

3. Why is the U.S. involved?

Trump and members of the U.S. Congress worry that Nord Stream 2 will make Europe overly dependent on Russia. Trump has said that Germany in particular will become “a captive to Russia.” And it’s clear that the U.S. is keen to increase its own sales to Europe of what it calls “freedom gas.” In June, a bipartisan group of senators proposed expanding the current sanctions against Nord Stream 2 to include insurers, certifiers, IT companies working on the project. Senator Ted Cruz, one of the lead sponsors of the legislation, said the pipeline poses “a critical threat to America’s national security and must not be completed.” The Economy and Energy Committee of Germany’s lower house said the new sanctions clash with international law, while Chancellor Angela Merkel’s administration was said to be considering pressing for coordinated European Union action should the U.S. tighten the sanctions.

4. What do the sanctions mean for the project?

Works at the Nord Stream 2 offshore site halted in late 2019 and neither the pipeline operator, Nord Stream 2 AG, nor its parent company Gazprom PJSC have announced a new construction plan. However, earlier this year Russia sent a pipelaying vessel, Akademik Cherskiy, on a three-month journey from the east Pacific coast to Germany’s Baltic port of Mukran…

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2020-06-28 10:00:00

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