Merkel herself has repeatedly stated the benefits of the gas pipeline, which is able to provide both Germany and Europe as a whole with stable supplies. At the same time, this did not prevent the German Chancellor, who was leaving his post soon, to negotiate with the United States about the conditions for putting the project into operation. And, apparently, it is no coincidence that on the eve of Merkel’s visit to Moscow, the leading German business newspaper Handelsblatt named the most serious obstacles to the full operation of the new gas pipeline. Russian experts assessed the degree of threat to Nord Stream 2.
One of the main questions for the German business community on the eve of the imminent resignation of Angela Merkel is the fate of the almost completed pipeline, which bypasses Ukraine and is able to connect Russia and Europe with a new thread for the supply of energy resources. Merkel has always sided with the Russian highway, in which German investors have invested heavily. However, whether a similar disposition will continue after Frau Chancellor retire is not entirely clear. Washington continues to threaten the Russian project with new sanctions, while Berlin is negotiating with the Americans about the conditions for the future operation of the pipeline.
Handelsblatt experts have identified seven key obstacles to the operation of SP-2. Firstly, it is the EU Gas Directive, tightened two years ago purposefully to complicate the project’s functionality – Brussels may give Gazprom the right to be the pipeline operator, despite the fact that the Russian monopoly owns 100% of the Swiss company Nord Stream, which controls transportation.
Secondly, their own internal European policy – Poland and the Baltic states do not want to strengthen Russia in the fuel market of the Old World.
Thirdly, this is the position of Ukraine, which is losing transit revenues with the introduction of a new Russian gas pipeline.
Fourth, the negative attitude to the project of a number of MEPs. Fifth, the German Green Party, which has consistently opposed the commissioning of the gas pipeline. Sixth, the lawsuits of environmental organizations believe that the project is contrary to the EU climate policy.
Finally, seventh, the appointment of American diplomat Amos Hochstein to the post of curator of energy security of the USA plays against the project – he is known as an ardent opponent of the SP-2, therefore, in his new post, he will continue to exert a negative impact on the situation with the construction of the gas pipeline. At the request of MK, Russian experts assessed the severity of the risks for the SP-2 project named by the German publication.
Natalia Milchakova, Deputy Head of IAC Alpari: “The most serious obstacles to the SP-2 listed by Handelsblatt are two: a possible victory in the elections to the Bundestag for the Green Party opposed to the pipeline, and the EU Gas Directive.
The first of these obstacles is quite relative: the German Green Party is unlikely to gain an absolute majority of votes in the German parliament, although its representatives have a chance to enter the coalition government together with the ruling bloc of the center-right political parties of Germany – the Christian Democratic Union and the Christian Social Union Bavaria. In any case, without the approval of other political forces, the “greens” will not be able to prevent the operation of the SP-2.
But the third EU energy package, which restricts the use of gas pipeline capacities in the territory of the EU countries by one supplier of “blue fuel”, may be a more serious obstacle. It is no coincidence that a number of MEPs from Poland demand that Strasbourg try to catch up with the departed train and adopt additional resolutions from the European Commission, demanding admission to the gas pipeline from other suppliers, except Gazprom. Even in this case, Germany is highly likely to make a compromise decision – German importers will buy raw materials from the border with Austria. Then, legally, the pipeline will be operated by two suppliers, which the EU’s Third Gas Directive not only permits, but even encourages.
According to Gazprom’s forecast, the launch of Nord Stream 2 will take place in October, that is, after the elections to the Bundestag. There are no significant obstacles to the future operation of the gas pipeline, however, uncertainty remains: information on future counterparties of Gazprom, who will receive gas through the new pipeline, has not yet been disclosed. There is not much time left until October, so observers just need to be patient and wait. “
Artem Deev, Head of Analytical Department, AMarkets: “The EU gas directive applies to gas pipelines built after May 2019. SP-2, “thanks” to the US sanctions, was not commissioned during this period, therefore, instead of 55 billion cubic meters of gas per year, Gazprom will use only half of it. This lengthens the return on investment. Although, when the project was calculated, these terms exceeded four decades. That is, the Russian side will most likely return the funds invested in construction only in the second half of the 21st century.
Poland and the Baltic states have included the maximum resistance to the project in recent years, but now the limit of their capabilities is practically exhausted. Ukraine will stand firmly for its transit revenues. The latest agreements between Germany and the United States, where the operation of the SP-2 is tightly linked with transit through Independence, confirm this prediction. Gazprom has little room for maneuver under the latest transit agreement. The Russian supplier will be in charge of the supply and will pay more for it than before. The costs associated with the commissioning of Nord Stream-2 will increase because of this.
MEPs, in turn, will continue to demonstrate their negative attitude towards the gas pipeline, to make some proposals, but the issue of EU energy security is unambiguous – the Europeans need the gas pipeline to ensure diversification of supplies. The situation with an abnormal rise in gas prices this summer (quotations of a thousand cubic meters rose to $ 590) and half-empty storage facilities before the start of the heating season are proof of this. The gas pipeline has successfully passed environmental assessments even at the stage of approvals. There are estimates according to which SP-2 does not violate the natural balance of the Baltic countries. This summary confirms that the project complies with very strict safety requirements in terms of EU environmental legislation.
Hochstein’s appointment as senior adviser to the US State Department on energy security and special envoy for the implementation of the agreement to launch the gas pipeline is, of course, unpleasant news. He is an expert in the work of energy systems and, while working under Obama, he studied in detail the “kitchen” of fuel relations in the international market. He will closely follow all stages of the project’s commissioning and its work in the future, which threatens with new problems and nagging.
At the same time, it was already reported that after the completion of the SP-2, a little more than 5 billion cubic meters of gas (10% of its maximum capacity) could be supplied through the pipeline by the end of the year. In any case, the gas pipeline will reach full volumes of supplies (27 billion cubic meters per year for the Third Energy Package) no earlier than the end of 2022.
The main danger is that the United States or Germany will think that Russia is using the SP-2 as an instrument of blackmail in transit with Ukraine. Then new sanctions are possible – restrictions can be introduced after the start of the pipeline operation ”.
Anton Grinstein, expert at Hamilton Information and Analytical Center: “The main risks for the SP-2 are the spread of the EU’s Third Energy Package and the opposition of the Green Party, if in the parliamentary elections in September 2021 it gets a majority in the German parliament. Both topics are related.
While the formal owner of the gas pipeline, the Swiss company Nord Stream 2, is not certified as an independent operator, it is the German parliament, the chancellor and the courts that will decide whether the EU Third Energy Package should apply to Nord Stream 2.
Given the pace of construction and commissioning of the gas pipeline, this topic will not be an acute issue in 2021. At the beginning of June, the construction of the first branch of the gas pipeline was completed, and according to the latest statements from Gazprom, it will start operating around mid-October 2021. This follows from the plans of the Russian monopoly by the end of the year to supply only 5.6 billion cubic meters of fuel through the gas pipeline. With a design capacity of 55 billion cubic meters per year, it is obvious that supplies will be carried out only through one branch. If the second branch is completed in September, then its commissioning will take place at the beginning of 2022. This is where the question of applying the rules of the EU’s Third Energy Package to SP-2 will arise – Nord Stream 2 will obviously not have time to pass certification as an independent operator by this time.
This means that at the height of the heating season in Europe, with a record shortage of gas in European underground storage facilities, the new German parliament and the new chancellor of the FRG will have to decide: apply the rules of the EU’s Third Energy Package to Nord Stream 2 and leave it half-loaded, or continue Merkel’s course, allowing the new pipeline to operate at 100% of its design capacity. “
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