In Depth

What has Nord Stream 2 got to do with Ukraine invasion?

Germany pulls the plug on pipeline following Russian troops deployment

Germany has halted the approval of the Nord Stream 2 gas pipeline in response to Russian aggression against Ukraine.

Chancellor Olaf Scholz said that the government in Berlin had decided to “reassess” the certification of the pipeline, which has been built but has not begun operating yet, in light of the deployment of Russian troops to Luhansk and Donetsk.

Deciding on the ultimate future of the project “will certainly take time, if I may say so”, Scholz told reporters in Berlin.

Contentious project

Nord Stream 2 has long been a sticking point in Germany’s relations with its European allies.

In July, the government in Berlin was accused of sidelining eastern European concerns when it struck a deal with the Biden administration that both sides said would stop Russia from using the project to gain political leverage over their allies.

The Economist has called it “the world’s most controversial energy project”. Germany has previously “vigorously supported it”, Poland thinks it is “anti-competitive”, US lawmakers across the political spectrum worry it is “handing too much power to Putin” and Ukraine “sees it as a potential Russian noose around its neck”, the paper said.

The pipeline will carry 55 billion cubic metres of gas per year to Europe and will double Russian gas exports to Germany. But it has been met with fierce resistance from Ukraine, which stands to lose around $3bn (£2.2bn) a year in gas transit fees.

Writing on the Atlantic Council in October, the chief of Ukraine’s gas transmission system operator, GTSOU, suggested that the Kremlin would inevitably try to “weaponise energy supplies” against Ukraine and Europe as a whole once the pipeline began operating. 

Russia’s “tightening grip” on gas supplies “is already being felt across Europe”, Sergiy Makogon wrote. “Anyone still wondering about the origins of the present European gas crunch should consider the Kremlin’s recent statement confirming that ‘the commissioning of Nord Stream 2 will balance natural gas price parameters in Europe’. 

“If this is not an effort to blackmail Europe, what is?” he asked.

With Russian troops now on the ground in two separatist-held states in eastern Ukraine, Germany appears to have heeded the warning about Kremlin blackmail. 

“The situation today is fundamentally different and therefore, in light of recent events, we must also reassess this situation with regard to Nord Stream 2,” Scholz said. “I asked the economy ministry to withdraw the existing report on the analysis of supply security.

“This sounds technical, but it is the necessary administrative step so that no certification of the pipeline can now take place. And without this certification, Nord Stream 2 cannot go into operation.”

‘Thirst for gas’

The future of the Nord Stream 2 project now “hangs in the balance”, The Guardian said, with Germany’s decision to postpone the certification of the pipeline serving as a tacit admission that “gas is not just a source of energy, sometimes it is a political weapon”.

But the decision is not quite as black and white as simply halting the plan and punishing Russia. While Moscow earns 60% of its import revenues from the EU, the bloc relies on Russia for 41% of its gas.

Analysts at the Brussels-based Bruegel think tank have suggested that the EU could make it through to the summer without Russian gas imports. But beyond that, “the picture becomes more complicated when the intricacies of individual economic, technical and political gas markets across the EU are considered”.

“Getting through half a winter without Russian imports could be difficult, but running the European economy for several years without Russian gas would be hugely challenging.”

The incursion into Ukrainian territory by Russian troops “could force a reckoning” in which the EU is forced to “reduce dependence on Russian gas”, The Guardian said. But “Europe’s thirst for gas, it seems, is not going to disappear anytime soon”.

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