President Biden and Chancellor Angela Merkel agreed to disagree on the Nord Stream 2 gas pipeline project of Gazprom during Merkel's visit to Washington.
Per a Reuters report, President Biden said, "Good friends can disagree," with regard to the pipeline, which the United States opposes with the argument that Russia could use it to penalize Ukraine.
Germany, however, needs a lot more natural gas as it shuts down coal and nuclear plants in its own green push and has staunchly defended Nord Stream 2. This has strained bilateral relations because, in addition to geopolitical concerns, the U.S. also produces a lot of liquefied natural gas that it needs to export, and Germany is one logical destination.
The Biden administration has been criticized for mellowing out on Nord Stream 2 after the State Department waived sanctions on German entities involved in the pipeline project in a sign of goodwill.
There was really no other way things could have ended during that visit. The interests of Germany and the United States totally diverge here. The U.S. wants to export its LNG, and Germany is willing to buy some of that, as long as the price is right, as a German minister said a couple of years ago when the Trump administration was pushing for more U.S. LNG imports and the cancellation of Nord Stream 2.
Germany, on the other hand, needs gas, wherever it comes from. What many commentators on the topic seem to forget is that it is already receiving billions of cubic meters of gas via the Nord Stream 1 pipeline. The current project is simply an expansion of an already existing pipeline.
True, this would mean less gas going through Ukraine. It is the responsibility of the Ukrainian authorities to diversify their revenue sources instead of relying overwhelmingly on gas transit fees from a state with which it has had less than friendly relations for years.
By Irina Slav for Oilprice.com
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