• 10 hours Elon Musk Goes Full Conspiracy Theorist, Blames Big Oil for Tesla's Negative Media Coverage
  • 5 hours Holiday weekend: Gas Prices Surge
  • 14 hours Why Alberta Will Win The War Over Trans Mountain
  • 22 hours Democrats Urge Trump to ‘Stand Up to OPEC’ Amid Rising Oil Prices
  • 9 hours Several US News Sites Block EU Readers After Missing GDPR Deadline
  • 10 hours How Much Oil Could EVs Feasibly Displace by 2040?
  • 1 day High Oil Prices Becoming Herd Mentality
  • 21 hours Expected:Trump Cancels Summit With North Korea Scheduled For Next Month
  • 1 day Russia/Germany Pipeline Really A Security Threat for US?
  • 23 hours How Lousy Shale Oil Economics Will Pull Down The U.S. Economy
  • 14 hours Trump announces more sanctions on Venezuela after Maduro Win
  • 13 hours $5 per gallon in Manhattan
  • 1 day "US fiscal outlook not good"-Goldman Sachs
  • 1 day Saudi Aramco IPO Seems Unlikely
  • 21 hours VW Just Ordered $48 Billion in Electric Car Batteries. That's About What Tesla Is Worth Right Now
  • 11 hours HAPPY RIG COUNT DAY!!
Alt Text

This Major LNG Exporter Is Facing A Gas Shortage

Australia is standing on the…

Alt Text

Can The U.S. Avoid The LNG Export Trap?

The U.S. has ramped up…

Alt Text

LNG Remains In Tight Supply In This Key Market

PetroChina has begun cutting natural…

The Jamestown Foundation

The Jamestown Foundation

Founded in 1984, The Jamestown Foundation is an independent, non-partisan research institution dedicated to providing timely information concerning critical political and strategic developments in China,…

More Info

Trending Discussions

Germany Moves Forward With Controversial Nord Stream Two

Pipeline pieces

Vladimir Putin started his fourth term as Russia’s president by promising ambitious new social programs (Kremlin.ru, May 7). He may be able to deliver on these promises because the price of petroleum, one of the mainstays of Russia’s state budget, has risen steadily. A barrel of oil, which was $30 two years ago, fetched $70 this week.

Another reason Putin may be optimistic is Germany’s unswerving support for Nord Stream Two, the undersea Baltic pipeline that will supply Russian natural gas directly to Germany and other parts of Europe. Nord Stream Two will double the capacity of the previously built Nord Stream One pipeline from 55 to 110 billion cubic meters per year. German Chancellor Angela Merkel’s government has backed the Russian-led project, despite protests from the European Union and several EU member states. At the same time, Russia’s state-owned Gazprom is building a pipeline that will supply Europe from the south, as well. The goal is to prevent Europe from developing alternatives to Russian gas, which gives the Kremlin important political-economic leverage over the continent (see EDM, April 11).

On May 3, Germany became the first EU country to begin building its portion of Nord Stream Two—in its Baltic Sea port of Lubmin (Pipeline-journal.net, May 3). The construction started before Sweden and Finland signed off on the pipeline running through their waters. The Lubmin work was a poke in the eye to both the European Commission and European Parliament, both of which oppose the project (Europarl.europa.eu, April 11). Related: Did Trump Just Kill The OPEC Deal?

By pursuing the pipeline, Germany is also defying the United States and Ukraine. Washington has threatened sanctions against the Nord Stream Two project’s five European partners—Engie, OMV, Shell, Uniper and Wintershall. Moreover, US President Donald Trump called Berlin hypocritical for supporting a Russian revenue project while enjoying the benefits of the North Atlantic Treaty Organization’s (NATO) protective umbrella against Moscow (Whitehouse.gov, April 3).

Russia embarked on Nord Stream to reduce its reliance on gas pipelines to Europe that run through Ukraine. If Russia is able to entirely shift its export volumes away from the Ukrainian pipeline network, Kyiv stands to lose billions of dollars per year in gas transit fees. On a trip to Berlin in early April, Ukraine’s President Petro Poroshenko again failed to persuade Merkel to pull out of the Nord Stream Two project (Kyiv Post, EurActiv, April 10). She has continued to try to soothe both Ukraine and those EU countries worried that Nord Stream Two will not only undermine Ukraine’s economic viability but also keep the European continent dependent on Russian gas. In a meeting with Slovakia’s Prime Minister Peter Pellegrini, Merkel tried to square the circle by calling for “constructive and long-term solutions aiming to keep Ukraine a transit country for Russian gas” (TASS, May 2).

Meanwhile, Russia has chosen a general contractor for its segment of Nord Stream Two—Stroytransgaz, half-owned by President Vladimir Putin’s billionaire friend Gennady Timchenko (RBC, May 3). And Gazprom’s deputy CEO, Aleksandr Medvedev, has even said on Russian TV that he would not rule out a Nord Stream Three, if there is European demand (Vesti, April 24).

Along Europe’s southeastern flank, Gazprom has also completed the first segment of the Turk Stream pipeline, which will send Russian gas under the Black Sea to Turkey and on to southern Europe (Rian.com.ua, April 30). It completed the 900-kilometer segment in less than a year—a record pace for laying complicated deep-water pipeline infrastructure (Gazprom Official Website, Gazprom.com, April 30).

In contrast, it took almost three years to build the 1,345-kilometer Trans-Anatolian Pipeline (TANAP), which will deliver gas overland from Azerbaijan through Georgia (via the South Caucasus Pipeline) to Turkey and beyond to Europe (Natural Gas World, May 2). Work is set to begin June 19 on a pipeline connecting TANAP from the Turkish border to Southeastern Europe.

Germany’s continued support for Nord Stream Two and Washington’s failure to make good on its threats to sanction major Russian gas projects are key reasons why Gazprom continues to build pipelines to Europe. EU member states are not only divided on Nord Stream Two, but also on policies to decrease the continent’s dependence on Russian gas. Related: Iran Accuses U.S. Of Pushing Up Oil Prices

Germany wants to import more Russian gas as it phases out coal and nuclear power. And a combination of Russian gas and planned liquefied natural gas (LNG) facilities will make Germany an important European gas hub (Oil Price, March 20). Germany’s support for Nord Stream Two is a double-edged sword for the rest of Europe, however. On the one hand, its plans to become a natural gas hub would boost the EU’s largest economy; and both Berlin and Moscow claim the pipeline will make Europe as a whole more energy-secure. On the other hand, these plans will clearly undermine the EU’s energy-supply diversification efforts by flooding European gas markets with Russian supplies.

The completion of Nord Stream Two, expected for 2019, would increase Moscow’s stranglehold on the continent’s energy supplies. It would also provide Russia with a useful tool to put greater pressure on Ukraine. Given the long-term threat that a number of European leaders say Nord Stream Two poses to the continent, Germany may someday have to choose between its own Russia-related economic and political ambitions and the continued viability of Europe’s political and energy unions.

By The Jamestown Foundation

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • Mamdouh G Salameh on May 12 2018 said:
    Despite protests from the Baltic States and the Ukraine and threats of sanctions by the United States against the Nord Stream 2 project’s five European partners, Germany began building its portion of the project—in its Baltic Sea port of Lubmin.

    Once completed by the end of 2019, Nord Stream 2 along with its twin Nord Stream 1 will eventually provide a total of 110 billion cubic metres per year (bcm/y) of Russian gas supplies to Germany and the North-West European gas market. Gazprom also envisages building a Nord Stream 3 if there is more European demand for Russian gas.

    Putting geopolitics and political pressure from the United States aside, Nord Stream 2 is an economic project first and foremost though it is viewed by the United States, Poland and the Baltic States as tightening Russia’s grip on Europe’s energy supplies. Russia provides roughly 40% of Europe’s gas needs.

    Germany receives 57% of its natural gas and 35% of its crude oil from Russia. Furthermore, Russian gas is and will remain cheaper for Germany than US LNG for the foreseeable future until US producers can match Russian gas prices.

    Germany wants to import more Russian gas as it phases out coal and nuclear power. And a combination of Russian gas and planned liquefied natural gas (LNG) facilities will make Germany an important European gas hub.

    Russia embarked on Nord Stream 2 to reduce its reliance on gas pipelines to Europe that run through Ukraine. Still, Russia has continued to soothe both Ukraine and those EU countries worried that Nord Stream 2 will not only undermine Ukraine’s economic viability but also keep the European continent dependent on Russian gas.

    Along Europe’s south eastern flank, Gazprom has also completed the first segment of the Turk Stream pipeline, which will send Russian gas under the Black Sea to Turkey and on to southern Europe. The goal is to prevent Europe from developing alternatives to Russian gas, which gives the Kremlin important political-economic leverage over the continent.

    The United States has always been opposed to Nord Stream 2 partly because it will tighten Russia’s grip on Europe’s energy supplies but mostly because of self-interest.

    The truth of the matter is that President Trump’s opposition to Nord Stream 2 is plain and simple an attempt to ensure markets for US LNG and displace Russia as gas supplier to Europe.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Franco DeCelisw on May 14 2018 said:
    Basically it is Western Europe utilising the resources of nearby Russia. The price cannot be beaten. Europeans can see the logic of this. Both pipelines will be built. Unfortunately Turkey will now take the bulk of royalties in the south and not Bulgaria and other EU countries.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News