Nord Stream 2 likely to stick despite Germany’s navy poisoning

The Academic Cursky Pipe layer is seen in the Gulf of Gadak in the Baltic Sea. According to Russia’s Energy Minister, Novak, academics may be involved in the construction of the Chursky Nord Stream 2 pipeline.

Vitaly Newar | TASS | Getty Images

Germany has stepped up pressure to pull the plug on its controversial giant gas pipeline project with Russia following the suspected poisoning of Russian opposition politician Alexei Navalny.

Experts say it is unlikely to do so for Berlin, however, given that the Nord Stream 2 project is over 94% complete after a decade of construction, it includes major German and European companies, And is essential to the region’s current and future energy needs.

In this case, economic and commercial interests may reduce political pressure to punish Russia.

“I am not exiting Germany from this project,” CNG quoted Carng Brusky, head economist and head of the euro, Global Zone, economist at ING on Thursday.

“But the domestic debate of the last days has made it clear that patience is running low. Many people are still in favor of this. But they will need to demonstrate to Moscow clearly that practical cooperation is possible and indeed Can bear fruit – for example about management. ” Situation in Belarus, ”he said.

Germany’s Foreign Minister Heiko Maas indicated last Sunday that Russia had to play its role in the Navy during an investigation into the attack.

A fierce critic of Russian President Vladimir Putin, Navalich was left seriously ill after a toxic poisoning with Novichok nerve agent.

“I hope the Russians do not force us to change our position about Nord Stream 2”, Germany’s Foreign Minister Heiko Maas told the Beld Sontag newspaper.

Germany has been reluctant to link the fate of its partnership with Nord Stream 2 to the naval event so far, and Maas admitted that stopping the construction of the pipeline would hurt not only Russia but also German and European firms.

He added, “Anyone called to stop the project should be aware of the consequences. Nord Stream 2 includes more than 100 companies from twelve European countries, and about half of them are from Germany.”

Gas analyst Jane Rangel of Energy Aspects told CNBC on Wednesday that he and his colleagues are “watching the situation as it continues to develop” and noted that the Navy’s venom “puts Germany in a difficult position.”

“This is another challenge to end the project and it certainly risks that Germany may take action, one of the most obvious solutions being Germany refusing to give regulatory approval to the pipeline,” he said. said.

Rangel said that German Chancellor Angela Merkel could choose to tell the Bundesnetszentur, the official body responsible for authorizing the pipeline, Rangel for not approving the project.

“At that point, we will assume that if it did not get regulatory approval, Gazprom would bring it to court. Then the court could possibly overturn it and that means the German government scores its political point, but the project is eventually approved. She goes.”

Politics vs Commerce

For its part, Russia, which denies any involvement in the naval incident, has made no impact on the Nord Stream 2 project. Kremlin spokesman Dmitry Peskov said on Tuesday that Russia did not see the risk of suspending the pipeline in Germany.

According to Bloomberg, “There is no basis for considering the issue at the political level.” “This is a commercial international project. Why should we talk about any measures about the international project, where the German companies are also involved? That doesn’t seem fair.”

In essence, Nord Stream 2 is a collaboration between Russian state gas firms Gazprom and five major European energy companies, including E.ON, Shell and Angry, although Gazprom is the largest shareholder.

The pipeline, estimated to cost around 9.5 billion euros ($ 11.3 billion) to build, will double the amount of natural gas that can be transported under the Baltic Sea to Germany (about 110 billion cubic meters) Per year) and will run parallel to an existing pipeline, Nord Stream 1, which was completed in 2011.

According to the European Commission, Russia was the largest supplier of natural gas to the European Union in both 2018 and 2019.

One of Russia’s main objectives with the new pipeline is to enable Ukraine to bypass, a country with which Russia has strained geopolitical and commercial relations, as it delivers gas to Europe. Ukraine, like the US, opposes Nord Stream 2 because the country claims that it strengthens Russia’s energy influence in Europe and weakens the region’s energy security, something that Russia and Germany deny.

However, opposition to the project has affected its progress, particularly with US sanctions announced against ships laying underwater pipes for the project last December. This prompted Allseys, a Swiss-Dutch offshore services group, to suspend its share in the project.

US lawmakers are considering further restrictions on the project, however, despite already laying pipelines totaling 2,460 kilometers (2,460 kilometers of Nord Stream 1 and 2), if approved, they will have Not much time to make a significant impact.

A spokesman for Nord Stream 2 told CNBC that as a developer of a commercial investment it could not comment on the political debate.

“Our project is based on investments from six major energy companies, five of them from EU countries. Project implementation from authorities in four EU countries and Russia in compliance with national law, EU law and legal requirements from international conventions Construction is based on permits., ”Said spokeswoman Jane Muller.

“The companies that support Nord Stream 2 and our project are confident that the earliest possible future of the pipeline is in the interests of Europe’s energy security, climate objectives, competition and the prosperity of European businesses and homes.”