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Ukraine Invasion Could Crush Russia’s Nord Stream 2 Ambitions

The European Union would target Russia-led gas pipeline project Nord Stream 2 if Russian invades Ukraine, as part of an EU package of sanctions being prepared in case of an armed conflict, Austria said on Monday.

“Certification (of the pipeline) would then be stopped (if Russia invaded). There is no question about that. That, therefore, means that Nord Stream 2 is part of the sanctions,” Austrian Chancellor Karl Nehammer said during a news conference on Monday, as quoted by Reuters.

The pipeline construction is completed, but Nord Stream 2 is awaiting full regulatory clearance from Germany and a review by the European Union over its compliance with EU energy regulations.

However, in case Russia invades Ukraine, Nord Stream 2 may never see the light of day.

Earlier this month, U.S. President Joe Biden issued a threat for the Nord Stream 2 project if Russia were to invade Ukraine, although he did not elaborate on how such a move would be made.

“If Russia invades -- that means tanks or troops crossing the border of Ukraine, again, then there will be no longer a Nord Stream 2,” the U.S. President said at a joint press conference with German Chancellor Olaf Scholz, as quoted by CNBC. “We will bring an end to it.”

Amid heightened tensions between Russia and Ukraine, and Russia and the West over Ukraine, European Commission President Ursula von der Leyen told CNBC last week that “everything is on the table,” including energy-related sanctions against Russia.

“Secretary Blinken and Foreign Minister Lavrov are scheduled to meet later this week in Europe, provided Russia does not proceed with military action. President Biden accepted in principle a meeting with President Putin following that engagement, again, if an invasion hasn’t happened,” the White House said on Sunday, referring to the latest diplomatic efforts to de-escalate the Russia-Ukraine situation. 

By Michael Kern for Oilprice.com

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  • Joe Tierney on February 22 2022 said:
    The 'death' of NordStream2 is not imminent, nor is it anywhere 'in the cards'. Why not? Because Mr. Putin is obviously going to invade Ukraine proper and no one and nothing can stop him. Once he succeeds, and he most certainly will succeed, guess what happens to the old pipelines managed by Ukraine? That's right - they will either be 'damaged' by mysterious saboteurs or else they will be shut down for long-overdue 'maintenance' by its new owners - Russia. The EU's underground gas storage is virtually on empty, and as for LNG storage, it's at capacity already, while at the same time Germany has no LNG import facilities at all. Mr. Putin will shut off the gas to the EU (or severely limit deliveries) until they are forced to certify NordStream2. They have no way out. Putin fully has them 'over a barrel'. And then Mr. Putin will drive home the point that the EU making itself America's lap dog and doing its geopolitical bidding, as in the Maidan crisis in Ukraine, is a losing policy.
  • Mamdouh Salameh on February 21 2022 said:
    This is more of a pipe dream than a real threat. The reason is that the European Union (EU) particularly Germany needs Nord Stream 2 for its future energy security.

    If the Ukraine crisis escalates into a military conflict, the United States will impose the harshest ever sanctions against Russia including oil and gas exports and Nord Stream 2 gas pipeline. It will also exert the maximum pressure on the EU to do likewise.

    The United States failed miserably to stop the construction of Nord Stream 2. It will now use the Ukraine crisis as the pretext to kill it. However, the United States can’t kill Nord Stream 2 except by physically destroying it. This will mean a nuclear war with a nuclear-armed-to-the-teeth Russia.

    Moreover, Germany will never join the United States in sanctioning Nord Stream 2. If it does, it will sink more than 150 major German companies which were involved in the construction of the pipeline and which contributed more than half the costs of the pipeline estimated at $11 bn. Furthermore, it will be a major blow to its economy and energy security. Germany depends on Russia for 65% of its natural gas and oil needs.

    And while the EU will impose new sanctions on Russia over the Ukraine crisis, oil and gas exports and Nord Stream 2 won’t be among them because Russia will immediately retaliate by halting all supplies to the EU thus prolonging and worsening an already damaging energy crisis.

    The EU is dependent on Russian oil supplies for 27% of its needs and 40% of gas needs.

    The entire LNG exports from the United States, Qatar and Australia could hardly replace the almost 200 billion cubic metres per annum (bcm/y) piped by Russia to the EU in addition to an estimated 15-16 million tons a year (mt/y) of LNG. Only Russia can satisfy the EU’s gas demand.

    Moreover, Europe has a limited LNG import capacity. This makes ramp-ups of LNG imports quite useless particularly if they are needed to replace Russia’s 40% share of the European gas market.

    Russia isn’t dependent on the EU for its gas and oil exports. It can instead transfer its entire gas and oil exports to the EU to China, the world’s largest energy market.

    Nord Stream 2 isn’t only here to stay but it will also be eventually certified by the EU whether the United States likes it or not.

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

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