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U.S., Germany Reach Deal On Controversial Nord Stream 2 Pipeline

The United States and Germany reached a deal over the controversial Nord Stream 2 Pipeline, the U.S. State Department said on Wednesday, clearing the way for the completion of the Russian gas pipeline and handing Germany a decisive victory in the matter.

The State Department media note, titled, “Joint Statement of the United States and Germany on Support for Ukraine, European Energy Security, and our Climate Goals,” began with Germany and the United States’ steadfast “support for Ukraine’s sovereignty, territorial integrity, independence, and chosen European path.”

The note also spoke of “Russian aggression and malign activities in Ukraine and beyond.”

Nevertheless, the United States a deal that will allow Germany to receive direct natural gas shipments from Russia through the Nord Stream 2 pipeline at volumes twice the current amount.

In the end, it would appear that Germany and Russia got precisely what they wanted.

Ukraine, however, will be cut out of the loop when it comes to the extra natural gas shipments that will flow through Nord Stream 2 to Germany.

Part of the agreement is Germany’s commitment to help Ukraine in negotiating an extension to its current transit agreement with Russia. As it stands now, this is set to expire in 2024. Germany also will commit $175 million to a “green fund” for Ukraine in order to support renewable energy projects, and another $70 million to help Ukraine with its energy security.

The agreement was largely expected, although the details were unknown up until this afternoon.

Germany’s need for more natural gas from Russia is great, as the country works to shut down coal-fired and nuclear plants as it heads toward net zero. For this reason, it has vigorously fought for Nord Stream 2 to be complete.

The United States, in an attempt to cultivate closer ties with Germany, has ended its fight against the pipeline in support of Germany.

By Julianne Geiger for Oilprice.com

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  • Mamdouh Salameh on July 22 2021 said:
    No matter how you look at the deal, President Putin emerges as the real winner over the Nord Stream 2 gas pipeline whilst the Iran lady of Europe Angela Merkel the Chancellor of Germany ends a highly successful political career with an outstanding victory over former President Trump and his administration.

    There hasn’t been even a shadow of doubt that Nord Stream 2 will be completed given Putin’s and Merkel’s determination to complete the job bolstered by the fact that it was a viable economic project first and foremost that will safeguard the EU’s energy security and supplies.

    U.S. Efforts to derail Soviet oil and gas pipelines to Europe have failed since the 1960s. Scraps over Soviet pipelines were a feature of the Cold War. In the early 1960s, Kennedy sought to halt the Friendship (Druzhba) oil pipeline leading from the Tatarstan region to Europe by pushing West Germany to cancel steel-pipe contracts with Moscow. Critics of the policy said that the sanctions drove the Soviet Union, which completed the project, to become self-sufficient in wide-diameter pipe production, hurting Western manufacturers.

    About two decades later, Reagan failed to block the more than 4,000-kilometer-long Brotherhood (Bratstvo) gas pipeline, which was being built to bring natural gas from Siberia to Western Europe.

    The Reagan administration's frenetic efforts to obstruct the building of the Soviet-European natural gas pipeline were described as marked by hypocrisy, self-deception and an astonishing ignorance of the past. No matter how much the US pressured its allies in Europe, it wasn’t able to stop the Soviet pipeline any more than the Kennedy administration was able to block" the Friendship oil pipeline.

    Russia will continue pumping 40 billion cubic meters of gas via Ukraine a year in line with the existing five-year contract which expires in 2024. President Putin may agree to extend the agreement longer depending on the Ukraine’s behaviour. Any attempt by Ukraine to join the EU or NATO is a red line for Russia. If it tries to cross it, it may cease to remain an independent country.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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