Monday

21st May 2018

Germany starts to build Nord Stream 2

  • Nord Stream 2 pipes being delivered for storage in Germany (Photo: nord-stream2.com)

Germany has started to pour concrete on a Russian gas pipeline that risks dividing the EU and harming its energy security.

The construction began in Lubmin, on Germany's Baltic Sea coast, on Thursday (3 May), with the laying of foundations for a terminal that will receive 55bn cubic metres (bcm) a year of Russian gas via the Nord Stream 2 pipeline when it goes online in 2020.

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  • Danish and Swedish permits still pending (Photo: nord-stream2.com)

"We're moving within the framework of the [German] planning approval decision," a spokesman for Gazprom, the Russian firm behind the project, told German press agency DPA.

"We're confident that we'll receive all relevant permits," the spokesman said.

The Baltic pipeline is to run from Russia via the maritime zones of Finland, Sweden, and Denmark. Finland recently granted a permit, with the other two pending.

Its opponents, including Poland, the Baltic states, and Nordic EU countries, have said Nord Stream 2 would help Russia to cut gas supplies to Western allies, including Ukraine, for strategic reasons.

The European Commission has said it could help Gazprom to gouge even higher prices in eastern Europe.

The US has also said it would make a mockery of Western sanctions on Russia, imposed over its invasion of Ukraine four years ago.

Next steps for the Russian project include the laying and welding of 200,000 pipe segments, each one weighing 24 tonnes, along 1,200 km of the Baltic Sea bed.

The pipes are already waiting in storage yards in Germany, Finland, and Sweden in a €9bn enterprise that includes five major EU energy firms and 200 other companies in 17 European countries, creating, Gazprom says, 1,000 jobs.

'Political project'

News of the Lubmin construction work comes despite German chancellor Angela Merkel's recent nod to Nord Stream 2 critics.

"This is not just an economic project, but [its] … political factors must also be taken into account," she said at a meeting with Ukrainian leader Petro Poroshenko in Berlin last month.

The construction is also moving ahead amid EU commission appeals to hold talks with Russia on how to apply European energy law to the pipeline.

Merkel's comments had given hope to Nord Stream 2 opponents that she might pause for thought on a scheme that has the potential to tear a rift between Germany and its EU allies.

The enterprise also risks a transatlantic rift after the US threatened to impose fines on the five EU energy firms - Engie, OMV, Shell, Uniper, and Wintershall - which are co-financing the pipeline.

Russia lobbyists

The Lubmin news was welcomed in some quarters, with Eduard Stavytsky, Ukraine's former energy minister, saying the EU needed Nord Stream 2 due to the depletion of its North Sea gas fields.

"Europe consumes about 425 bcm of gas per year. Russia set a record last year and delivered about 150 bcm," he said on Thursday, according to Kremlin media agency Sputnik.

Stavytsky used to work for the former, notoriously corrupt, Ukrainian regime, and fled to Israel after 42kg of gold and $5m in cash were found in his house in Ukraine's 2014 revolution.

Nord Stream 2 also has friends in higher places, such as former German chancellor Gerhard Schroeder, who went to work for Gazprom after he left office.

The CEOs of three of the EU firms backing the project - Austria's OMV and Germany's Uniper and Wintershall - joined in lobbying for the pipeline this week.

"Debates should be guided by facts, not fearmongering, which seems to be the preferred tool of the project's opponents," Rainer Seele, Klaus Schaefer, and Mario Mehren said in a joint op-ed in US journal The National Interest on Wednesday.

Simple hoax?

"The notion that Russia could use gas as a weapon - even if it wanted to - is simply a hoax," they said.

They pledged that Nord Stream 2 would not be used to cut off Ukraine, after Merkel told Poroshenko in Berlin that the pipeline could not go ahead if that were to happen.

But they hinted that Ukraine, which transited over half of Russia's gas exports to the EU last year, might suffer disruptions all the same.

"Germany and the EU are committed to ensuring Ukraine's place as a European gas partner. But placing all the proverbial eggs in the basket of Ukrainian transit is beyond foolhardy," the CEOs said.

Merkel: Nord Stream 2 is 'political'

Germany has for the first time acknowledged concerns on the "political" and "strategic" aspects of Russia's Nord Stream 2 gas pipeline.

Opinion

Nord Stream II aims to undermine Energy Union

The Gazprom pipeline simply does not have any commercial bearing. Rather, it undermines the functioning and effectiveness of the European Energy Union and circumvents Ukraine for gas transits - paving the way for further Russian strong-arming in the region.

US yet to push on Nord Stream 2 sanctions

Washington would still like to block a planned gas pipeline between Russia and Germany but is not yet considering hitting companies involved in the project.

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"With friends like that, who needs enemies?" European Council Donald Tusk asked on Wednesday, as EU leaders were trying to come up with a reply to the US president's questioning of the transatlantic relationship.

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EU leaders in Sofia will discuss how they can protect the bloc's economic interests against US threats to sanction companies doing business in Iran. But their options are limited.

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