Nord Stream 2, the controversial gas pipeline project that enrages Trump

News

Brussels | Donald Trump again lashed out Wednesday at the Nord Stream 2 pipeline project , which aims to double the Russian gas delivery capacity in Europe by the Baltic Sea.

What are the challenges of this project, defended by Germany, but which divides the Europeans?

AVOID TRANSIT THROUGH UKRAINE

The Nord Stream 2 pipeline, which is scheduled to be commissioned at the beginning of 2020, has a capacity of 55 billion m3 per year, which should double the capacity of the first Nord Stream, which transports gas from the Baltic Sea coast. Russia to Germany.

Four of the five countries whose waters are crossed by the project (Russia, Finland, Sweden, Germany) have given their permission, but the procedure is still ongoing in Denmark.

The Baltic route avoids passing through Ukraine, with which Russia has conflicting relations.

In the first quarter of 2018, Nord Stream became the main route of Russian gas supply to the EU (36% of the total, against 34% by Ukraine), according to the European Commission.

RESPOND TO EUROPEAN DEMAND

To justify doubling their pipelines, the Nord Stream 2 leaders argue that in the next 20 years, the EU will need to increase imports by 120 billion m3 to meet rising demand.

The level of future European needs is not unanimous among analysts, but it is certain that imports will increase because domestic production is declining, says Thierry Bros, Oxford Institute.

While it is difficult to increase imports from Norway and North Africa, the increase will come “Russian gas and liquefied natural gas” (LNG), says the expert.

“The consumer is a winner provided we do not have a company with too much market share,” he said.

In Russia, gas exports by land are the monopoly of Gazprom.

Gas imports into the EU come mainly from Russia (41% of non-EU imports in the first quarter of 2018), followed by Norway (35%) from North Africa (12%) and imports of LNG (12%) .

Qatar is the main supplier of LNG to the EU. In the first quarter, the share of US LNG fell to 1% of LNG imports, compared to 6% in the same period a year earlier.

EUROPEANS DIVIDED

At the head of the EU, the Commission remains very cautious about the project. Without being able to oppose it, it wants to make sure that it is well in line with the rules of the European energy market, particularly in competition matters.

Poland and the Eastern countries are the most vocal in their opposition.

Germany is the main defender, which has been the target of a new attack virulent US President at a NATO summit on Wednesday.

“The United States has always opposed this project, pointing to a fundamental contradiction in German policy,” said analyst Marco Giuli of the think tank European Policy Center (EPC).

“On the one hand, the country is a committed partner of NATO in favor of the sanctions regime (against Russia). At the same time, Germany fails to recognize the political dimension of Nord Stream 2 and seems indifferent enough to provide Russia with additional political leverage, “he explains.

AMERICAN INTEREST

The United States, a major producer of natural gas, has recently embarked on a trade offensive seeking new markets, supported by Donald Trump.

The defenders of Nord Stream 2 have repeatedly put forward the argument of the commercial strategy, says Marco Giuli: in the US law on sanctions against Russia, the United States make the connection with the opportunity to offset the losses of supply through their own energy exports.

But so far, US exports have mostly focused on the South American and Asian markets where prices are higher, observes Marco Giuli.

“As Chinese demand rises, there is a commercial interest in transporting gas in Asia rather than in Europe, where Russia has some ability to deter competition by dumping prices and increasing its capacity to flood the market, “says the analyst.

According to him, Russia would have less “commercial agility” without Nord Stream 2, but “that does not mean that Russia would not be able to surpass the price competition with the current infrastructure”.

Facebook Comments