Nord Stream 2 Pipeline is ready for operation

Context 

Russia’s Nord Stream 2 natural gas pipeline is ready for operation amid an energy crunch in Europe.

Image Courtesy: BBC 

About Nord Stream 2 Project

• In 2015, the Russian energy major Gazprom and five other European firms decided to build Nord Stream 2 which is valued at around $11 billion.
  • At a length of 1,230 kilometres, it is to follow the route of the existing Nord Stream twin pipeline underneath the Baltic Sea. 
  • It would transport natural gas from Russia directly to Germany (Russia’s Ust Luga to Greifswald in Germany).
  • The pipeline system’s total capacity is set to double to 110 bcm following Nord Stream 2’s completion. 
  • The pipeline crosses into the exclusive economic zones of five countries: Russia, Germany, Denmark, Finland, and Sweden.
  • The under-construction pipeline will run along with the already completed Nord Stream 1 system, and the two together will supply an aggregate of 110 billion cubic metres of gas to Germany per year. 
  • The Nord Stream 2 will provide a direct supply of natural gas under the Baltic Sea from the Russian city of Ust-Luga to the German city of Lubmin, avoiding transit through Ukraine and other European countries. 

Significance of the Pipeline

• More stable imports for Germany: Oil and gas imports in Germany are majorly done from other countries but this pipeline can definitely make the situation more stable as manufacturing is an important part of Germany’s economy.
  • The dispute over Nord Stream 2 takes place at a time when Germany has set out a plan to shut down its nuclear and coal power plants, with the objective of gradually moving towards renewable sources of energy. 
  • In order to fill the supply gap and diversify the sources, the country plans to build its first LNG terminal to receive gas from Qatar, the U.S., and others.
• Sustainable Gas Supply to Europe: This pipeline would provide Europe with a sustainable gas supply. Russia will get more direct access to the European gas market.
• Investment and Employment: The proposed route for Nord Stream 2 uses the territorial waters and Exclusive Economic Zone (EEZ) of Finland, Sweden and Denmark which would benefit the national governments and local authorities through investments and employment generated due to it. 

Controversies and Issues 

• The project has undergone a series of sanctions and controversies, morphing itself into the source of contention and political battleground. 
• At the end of 2019, U.S. President Donald Trump had signed a law that imposed sanctions on any EU company that was involved in completing the Nord Stream 2 pipeline.
  • The Biden administration still opposed the Nord Stream 2 pipeline but felt it was important to send a signal about its commitment to ties with Germany, which were badly damaged under former President Donald Trump.
  • The U.S. government is considering waiving sanctions on the company behind Russia’s Nord Stream 2 pipeline to Europe.
    • The waiver will give time for discussions with Germany on the potential negative effects of the pipeline and provide some leverage to deepen cooperation on broader issues, such as the pandemic, climate change, the economic recovery and dealing with China and Russia.
• The main reason: The main reason was apparently to restore trust and close cooperation between the U.S. and Germany.

Oppositions from other stakeholders  

• The Ukrainian authority has called the project a ‘dangerous geopolitical weapon’. 
  • The project, now about 95% complete, would bypass Ukraine, depriving it of lucrative transit fees and potentially undermining its struggle against Russian aggression.
• There is also strong opposition from the United States and most of the European countries (except for Austria, Germany, Hungary and the Netherlands). 
• Concern: Their concern is that once operational, the project would render more leverage and bargaining power to Russia while dealing with Europe and its energy market.
  • According to them, Russia is trying to use Nord Stream 2 as a political weapon to put pressure on European security and ‘undermine the democratic resilience of European institutions’. 
  • Russia is blamed for an intentional decrease in gas supplies to Europe, aiming to speed up the controversial Nord Stream 2 gas pipeline by European Union (EU) market regulators.
    • The pipeline will give better access to the Baltic Sea to Russia, thereby engaging in more military presence in that area.

Russia’s stand

• During the St. Petersburg International Economic Forum 2021, Russian President Vladimir Putin dismissed all concerns, saying that ‘Nordstream 2 is purely a commercial project, which is shorter, cheaper, and economically more viable, compared to the gas transit through multiple European countries.

Conclusion

• The pipeline offers stability to the strategically important energy trade because Russia’s dependence on the European Union and vice-versa are increased and this should promote realism.
• The launch of the Nord Stream 2 pipeline will lower gas prices on the spot market.
• All stakeholder countries should commit to strengthening relationships to ensure national and energy security in Europe.

Sources: TH + BS