The potential for more tensions in relations between the U.S. and Russia continue to mount. Late last week, U.S. Energy Secretary Rick Perry said that Washington could still impose sanctions related to the building of the controversial Nord Stream 2 pipeline, which would bring Russian gas directly to Germany under the Baltic Sea. Perry made his comments in Warsaw as the Trump administration tries to convince EU members to sign LNG deals with U.S. producers to offset over reliance on Russian pipeline gas.
On Thursday, Polish state-run gas firm PGNiG signed a long-term LNG deal with U.S.-based Cheniere Marketing International. Poland has been fervent in its resistance to the Nord Stream 2 pipeline as well as working to reduce its reliance on geopolitically charged Russian gas. Moscow, for its part, has cut gas supply to Europe in the past during cold winter months to exert its influence in the region.
Warsaw and Washington also signed on Thursday a joint declaration on enhanced energy security cooperation. “This is also a clear signal that the U.S. strongly supports a pro-Poland and pro-Europe energy security policy,” Perry said. “Energy security in turn requires energy diversity. That is the reason we oppose the Nord Stream 2 project which would further increase the dangerous energy dependence many European nations have on the Russian federation,” he added.
Poland consumes around 17 billion cubic meters of gas annually, more than half of which comes from Russian energy giant Gazprom under a long-term deal that expires in 2022. However, Poland has said that it would not renew the gas supply deal, making the country race against time to replace the contract with new gas volumes.
When asked at a news conference whether Washington could impose sanctions on companies working on the project, Perry replied: “I saw no signals where we would ever get to the point where we can support Nord Stream 2.” He added that “sanctions were an option that the president maintained.” Related: Aramco CEO: Expect IPO In 2021
The Nord Stream 2 pipeline has also been a point of contention between Trump and Germany as well. In a televised meeting with reporters and NATO Secretary-General Jens Stoltenberg before a NATO summit in Brussels earlier this year, Trump said it was “very inappropriate” that the U.S. was paying for European defense against Russia while Germany, the biggest European economy, was supporting gas deals with Moscow.
However, since then, Germany has indicated that it wanted to buy more LNG from the U.S., with plans to build three LNG receiving terminals. Germany also remains firm in its support for the Nord Stream 2 pipeline. The $11 billion gas pipeline will stretch some 759 miles (1,222 km), running on the bed of the Baltic Sea from Russian gas fields to Germany, bypassing existing land routes over Ukraine, Poland and Belarus. It would double the existing Nord Stream pipeline’s current annual capacity of 55 bcm and is expected to become operational by the end of next year.
Russia’s Gazprom is the sole shareholder in Nord Stream 2, shouldering 50 percent of the 9.5 billion-euro ($11 billion) bill. Gazprom’s Western partners are Austrian OMV along with Uniper, Wintershall, Shell and Engie.
Russia, for its part, claims that security concerns over the Nord Stream 2 pipeline are unfounded and that it is a purely economic venture. It also accuses the Trump administration of trying to erode Russian gas supply market share in Europe in favor of more expensive U.S.-produced LNG.
Russian Energy Minister Alexander Novak said in September that the pipeline would go forward even if sanctions were put in place. "We hope that there will be no sanctions. If U.S. restrictions are imposed, the project will be implemented anyway, the pipe laying has already started," Novak told reporters, adding that the plan envisions the project to be completed by the end of 2019.
By Tim Daiss for Oilprice.com
More Top Reads From Oilprice.com:
- The New Bear Market In Oil
- Plunging Battery Costs To Trigger Energy Storage Boom
- US Confident It Can Compete In Europe’s Gas Market