Germany approves Nord Stream-2 as issue over Ukrainian transit lingers

GAZPROM

Russia would be willing to continue to supply gas to the Ukrainian pipeline in addition to Nord Stream-2 if that improved its position with the EU, analyst says


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Gazprom’s Nord Stream-2 received the first construction permit from Germany last week as Berlin sees a direct pipeline from Russia as a step towards improving the energy security of one of Europe’s biggest economies.

Chris Weafer, a partner at Macro-Advisory in Moscow told New Europe, that both Nord Stream-2, which will bypass Ukraine from the north, and Turkish Stream in the south “are more likely than not because the recent explosion in Austria and the problems of supply in the UK and Norway in the North Sea, make both projects more likely than less”.

“It just reminded people that Europe is still vulnerable when it comes to energy. I certainly think that in any case, even before those recent outages, both pipelines were more likely simply because the big European countries, particularly Germany and Italy, which are the most dependent on imported energy of the big countries, they want these pipelines,” Weafer said. “That’s the bottom line. No matter what Brussels says or the smaller transit countries say, the big economies want energy security and for them energy security is having a direct pipeline. The Germans made this very clear with Nord Stream 1,” he said. “They were critical of Russia’s actions with Ukraine in 2006 and 2009 and were critical of Gazprom’s actions,” Weafer said, adding that nevertheless “despite European politics and objections from Brussels they built Nord Stream-1 to improve their energy security. I don’t think this has changed,” Weafer added.

Some EU countries, especially Poland and the Baltic states, and the United States oppose Nord Stream-2. US Secretary of State Rex Tillerson reportedly told a joint news conference with the Polish foreign minister in Warsaw that Nord Stream-2 is a threat to Europe’s energy security.

Nevertheless, on January 31, the Stralsund Mining Authority issued the permit for the construction and operation in German territorial waters and the landfall area in Lubmin (near Greifswald), in accordance with the German Energy Industry Act.

“Today’s decision is an important milestone for European supply security and European consumers,” EU representative of Nord Stream-2 Sebastian Sass said in an email. “The construction and operation of Nord Stream-2 will take place in full compliance with applicable EU law, national legislation and international conventions,” Sass said, reminding that Nord Stream-2 said it submitted its permit applications and environmental impact assessments (EIA) materials to the relevant national authorities in the five “permitting countries” – Russia, Finland, Sweden, Denmark, and Germany – in compliance with the applicable national legislation.

Under the Espoo Convention, Estonia, Latvia, Lithuania and Poland were also involved in this international consultation process, according to Nord Stream-2.

The European Commission has said that despite Nord Stream-2, Brussels wants gas transit via Ukraine to be maintained. Weafer he sees an “increase in dialogue between Europe and Russia over Ukraine”.

“Russia trying to engage more with Europe in the next couple of years to try and improve relations with Europe, as a counterbalance to kind of worsening position with the US and a key issue in those negotiations in engagement with Europe is, of course, Ukraine. So I would expect Russia making some concessions with regard to Ukraine specifically in order to try and improve relations with the European Union,” Weafer said.

He noted, however, that Russia is much more interested in Nord Stream-2 than it is in continued use of the Ukraine pipeline “but, nevertheless, I would think that Moscow would be perfectly willing to continue to supply gas to the Ukrainian pipeline in addition to Nord Stream-2, provided that the terms are right, if that improved its position with the European Union and, obviously, it would give some improved leverage with Kiev as well. It’s not an either or situation”.

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