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The new U.S. Administration has signaled for the first time that it could be willing to discuss with Germany the lifting of the American sanctions on the Nord Stream 2 gas pipeline project if Germany offers solutions to ensure Europe’s energy security, German business daily Handelsblatt reports, citing a U.S. official involved in the talks.
According to Handelsblatt, the U.S. has signaled readiness to talk about the easing of the sanctions against the controversial pipeline project from Russia to Germany, led by Russia’s gas giant Gazprom. In exchange, the U.S. expects Germany to propose ways to protect Europe’s energy security as well as Ukraine’s interests.
The Germans have to propose a package of solutions, otherwise the U.S. may not be able to get the issue with Nord Stream 2 out of the way, the U.S. official involved in the talks told Handelsblatt.
Germany has always looked at the project from an economic standpoint, while the United States, several European countries, including the Baltic states, Poland, and the European Union (EU), have expressed concern about Russia using gas sales and its gas monopoly Gazprom as a political tool.
Related Video: Weaponized Gas or Bridge to Cleaner Fuel? The Nord Stream Game
In recent months, the U.S. has been broadening the sanctions against service providers and those funding vessels involved in the construction of Nord Stream 2 in a fresh attempt to prevent the project from completing. There is still a stretch of the pipeline route to be laid in the sea, but the U.S. is now targeting anyone helping the project’s completion in any way.
Even Russian gas giant Gazprom has warned investors that the Nord Stream 2 project could be suspended or entirely discontinued due to extraordinary circumstances, including “political pressure.”
Meanwhile, France has urged Germany to scrap the Nord Stream 2 project altogether over the arrest of Russian opposition leader Alexei Navalny and the Russian authorities’ crackdown on Navalny’s supporters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
With 96% of the 1230-km long pipeline already completed and with billions of dollars already spent on constructing it, the prospects of President Putin or Gazprom abandoning the pipeline are unthinkable.
So the Biden administration has two options. One is continuing with the sanctions and ending up losing face and the other is to scrap the sanctions and start a new page with Russia, hence the reported United States’ face-saving suggestion to Germany to propose ways to protect Europe’s energy security as well as Ukraine’s interests.
However, the whole world particularly the Europeans know that US sanctions on Nord Stream 2 have little to do with European energy security and virtually everything to do with selling US LNG to the EU.
If by referring to Ukraine’s interests the Americans mean Gazprom guaranteeing continued Russian gas supplies going through Ukraine to the EU, then this has been taken care of when Gazprom signed a deal on 30 December 2019 with Naftgaz Ukrainy agreeing the continued Russian gas supplies to the EU via Ukraine initially during 2020-2024.
If, however, the reference is to Russia’s annexation of the Crimea, then the Americans can forget about it. Russia will even go to war rather than relinquish the Crimea or return it to Ukraine. After all, the Crimea was originally part of Russia.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London