Monday

12th Apr 2021

Putin questions Baltic pipeline, as oil and gas prices drop

Russian Prime Minister Vladimir Putin has questioned the construction of the Nord Stream pipeline for the first time since the signing of the agreement with Germany to establish the gas delivery network, as gas is set to become cheaper along with the drop in oil prices.

Two days ahead of the EU-Russia summit, Mr Putin said he would scrap a planned pipeline that would carry Gazprom gas under the Baltic Sea to Germany if Europe didn't show enough commitment. His remarks suggest the pipeline might be too expensive for Gazprom to build, especially since the price of gas is set to drop significantly.

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  • Putin tells Europeans they need to work harder for the controversial Nord Stream pipeline to be built. (Photo: kremlin.ru)

"Europe must decide whether it needs this pipeline or not," Mr Putin told Finnish Prime Minister Matti Vanhanen on Wednesday (12 November) at a meeting in Moscow.

"If you don't, we will build liquefaction plants and send gas to world markets, including to European markets. But it will be simply more expensive for you," he added.

His remarks come ahead of the EU-Russia summit in Nice on Friday, when EU leaders are set to announce the resumption of talks with their eastern neighbour on a strategic partnership agreement, suspended after the Russian-Georgian conflict.

Joachim Pfeiffer, energy-policy spokesperson for German Chancellor Angela Merkel's Christian Democratic Union, said in a statement that while Germany still supports the pipeline, "We won't insist on the Nord Stream project if it doesn't make business sense."

Moscow has so far never questioned the viability of the , km-long submarine pipeline, despite construction costs rising year after year, and now estimated to total €7.4 billion, according to the Suddeutsche Zeitung.

The German daily points out that the financial crisis has hit Moscow badly and that the price of oil, the driver of Russian growth, has dropped by 50 percent since the summer, leaving Gazprom highly indebted.

Mr Putin's calls for Europe to make up its mind about Nord Stream refers to geopolitical and environmental concerns raised by several EU member states. Even in Germany, the project sparked multiple controversies.

The agreement between then president Vladimir Putin and Chancellor Gerhard Schroder was signed during the latter's last weeks in office, with Mr Schroeder later hired later as a member of the Nord Stream board.

The Baltic states and Poland strongly oppose the project, concerned they would be cut off from existing gas infrastructure with Russia, as Moscow would probably channel most of the gas deliveries through the direct pipeline to Germany.

Sweden also opposes the project due to environmental concerns, echoed by MEPs, who have called for a new investigation into the pipeline's impact on the environment.

Finland, one of several EU states that has a say in approving the project, will conduct an environmental review of the plan next year, Mr Vanhanen said after the meeting with his Russian counterpart on Wednesday.

Missile quid pro quo

Ever since the decision of EU foreign ministers to resume talks with Russia, Moscow has softened its stance towards member countries. It has dropped plant import restrictions against Poland and postponed an increase in timber tariffs.

Even President Dmitri Medvedev's discussion of placing missiles in its Kaliningrad outpost the second day after the US elections has proven to be a short-term tactical gambit.

In an interview with Le Monde on Thursday, Mr Medvedev said he was not going to deploy the short-range missiles in Kaliningrad unless the US goes ahead with its planned missile defense shield in Poland and the Czech republic.

"We are ready to give up our decision to deploy missiles in Kaliningrad if the new US administration, after having analysed the real utility of the system in responding to 'rogue states' decides to abandon its anti-missile system. The first reaction of the US shows that the new administration is reflecting upon it. We are ready to negotiate a 'zero-option'," he said.

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