Trump vs Nord Stream-2

EPA-EFE/STEPHANIE LECOCQ

US President Donald J. Trump attends a meeting with NATO Secretary General Jens Stoltenberg (unseen) ahead of a NATO Summit, at the US Embassy in Brussels, July 11, 2018.

US President’s attack on Nord Stream 2 is also part of an effort to boost US liquefied natural gas exports to Germany, expert tells NE.


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At an early breakfast meeting with NATO chief Jens Stoltenberg in Brussels on July 11, US President Donald J. Trump launched an attack on the German government and its plan to construct the Nord Stream-2 gas pipeline from Russia to Germany.

“It’s very sad when Germany makes a massive oil and gas deal with Russia,” Trump said, later claiming, falsely, that the NATO military alliance is a tool whereby the United States “protects” Europe from external threats.

“So we protect you against Russia, but they’re paying billions of dollars to Russia, and I think that’s very inappropriate. And the former Chancellor of Germany is the head of the pipeline company that’s supplying the gas. Ultimately, Germany will have almost 70% of their country controlled by Russia with natural gas,” Trump said. “Germany is totally controlled by Russia, because they will be getting from 60 to 70% of their energy from Russia and a new pipeline,” Trump quipped.

Trump’s mention of a former German head-of-state in charge of the pipeline company was a reference to Germany’s controversial former chancellor, Gerhard Schröder, a long-time pro-Russian politician who enjoys a close personal friendship with Russian President Vladimir Putin, is now the chairman of Nord Stream AG and Rosneft, Russia’s second-largest state-run company after energy giant Gazprom.

In the wake of Trump’s statement, Nord Stream-2’s EU representative, Sebastian Sass, told New Europe on July 11, “The implementation of this project is not subject to a political sentiment, but a comprehensive framework of permitting procedures following clearly defined legal requirements that are based on EU and national legislation, as well as international conventions”.

He stressed that Nord Stream-2 does not participate in political speculation and pointed out that the project had already received permits from four of the five countries that will be directly affected by the pipeline’s construction. “The project continues to progress as planned,” Sass said, stressing that Nord Stream-2 is a commercial investment by six leading energy companies from five different European countries.

Trump praised Poland, noting that the Eastern European country “won’t accept the (Russian) gas. “You take a look at some of the countries — they won’t accept it (Nord Stream-2), because they don’t want to be captive to Russia. But Germany, as far as I’m concerned, is captive to Russia, because it’s getting so much of its energy from Russia. So we’re supposed to protect Germany, but they’re getting their energy from Russia. Explain that. And it can’t be explained — you know that,” Trump said.

US LNG to Germany

In addition to lessening Europe’s reliance on Russian gas, Trump’s attack on Nord Stream-2 is also part of an effort to boost US liquefied natural gas exports to Germany, Alexei Kokin, a senior oil and gas analyst at UralSib Financial Corp in Moscow, told New Europe by phone on July 12.

“The question is what happens to Germany’s gas imports when the Netherlands stops exporting its gas. It’s going almost stop exporting gas 10 years from now. It’s not just the issue of re-routing Russian gas via the Baltic Sea, it’s also a question of what to do with the Groningen field’s decline and in general the decline of imports the Netherlands,” Kokin said, referring to the Dutch government’s decision to reportedly phase out gas production at the large Groningen field, which has been damaged by small earthquakes, by 2030.

“It will have to be somehow replaced with something, and there is an opening for LNG (liquified natural gas), obviously, if Nord Stream-2 gets cancelled…this opening will be larger. If it doesn’t get cancelled, this opportunity will still present itself. I’m pretty sure that Germany will, to some degree, try to diversify its sources of supply so that Russian gas will not account for more than 40% or so of its imports,” Kokin said.

According to the UralSib expert, the situation that Trump described at the meeting with Stoltenberg on July 11, where Russia contributes 60 to 70% of Germany’s presumably gas imports, is only hypothetical.

“At the moment Russia is much less, probably 40%, with Norway and the Netherlands being the other two big exporters. In other words, if the Netherlands is out of the picture, it’s quite likely that LNG will enter anyway. There will be terminals built in Germany or there will be pipelines built from Belgian and Dutch terminals – that’s also possible. But if Germany opts to drop this new pipeline, then obviously the opportunity for LNG would be much greater,” Kokin said. “In theory, if you tried to imagine a scenario where all the imports from the Netherlands stopped altogether, and there was only Norway and Russia left as sources of gas, then it’s possible that Russia basically increases its share up to 60-70%. In theory, that is possible, but in practice, I don’t think that’s going to happen because much of the new gas from this Nord Stream-2 pipeline will go to other countries, not to Germany,” Kokin said.

EU bets on Ukrainian transit

The European Union has stressed that Russian gas transit through Ukraine should be maintained after 2019 when the contract expires even if Nord Stream-2 is built.

An initiative based on Vice-President for the Energy Union Maroš Šefčovič‘s trilateral ministerial talks with Russia and Ukraine regarding the long-term transit of gas to Europe will take place on July 17 in Berlin and involve Russian Energy Minister Alexander Novak and Ukrainian Minister for Foreign Affairs Pavlo Klimkin, as well as representatives of the two relevant commercial entities, the European Commission said on July 12.

Constructive and stable cooperation between Russia and Ukraine in the field of energy is of utmost importance for both countries and the EU, Šefčovič said ahead of the meeting, while stressing that the need for a continued, long-term transit of Russian gas through Ukraine to the EU in a reliable, commercially viable way is indispensable.

“As has been proven in the past, a trilateral process is the most effective platform to seek a satisfactory solution to the gas matters important for involved parties and to gas transit via Ukraine beyond 2019,” Šefčovič said.

EU-US Energy Council Meeting

At the eighth EU-US Energy Council meting in Brussels on July 12, which included the participation of Šefčovič and US Secretary of Energy Rick Perry, both sides focused on energy security.

The meeting addressed issues related to energy policy and markets; diversification of energy sources, suppliers and routes; cooperation relating to reforms in Ukraine’s energy sector and to its transit role; and cooperation on energy vulnerable regions, the US said in a press release.

Discussions also addressed the modernisation, development and resilience of energy infrastructure, including the importance to critical infrastructure protection through cybersecurity; clean energy innovation and other technology cooperation; and engagement with industry.

 

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