Germany wants the Russian pipeline. Allied Germany wasn’t sure it was a good idea.

Germany’s new Chancellor, Olaf Scholz, didn’t have to wait long after taking office to be asked about Nord Stream 2. An undersea gas pipeline from Russia to Germany, the project has sparked fury in Washington. and European capitals at a time when tensions with Moscow are high.

Mr. Scholz’s coalition government includes the Green Party, whose members are fierce critics of Nord Stream 2. He surprised many by taking the same stance as his predecessor Angela Merkel, who was champion. This pipeline as a business venture necessary for the success of Germany’s industrial base.

“Nord Stream 2 is a private sector project,” the new German chancellor told reporters. The final decision on approving the pipeline, he said, will be made by “an agency in Germany, which is completely apolitical”.

But it’s not that simple. With thousands of The Russian army is concentrated in large numbers on the border with Ukraine and the threat of possible US sanctions on the pipeline, the future of Nord Stream 2 remains uncertain.

Adding to the problem is natural gas prices in europe, has broken records in recent weeks because of tight supply. These prices are skyrocketing while half of Germany’s remaining six nuclear reactors are being taken offline and winter is settling in, boosting demand. Nord Stream 2 was initiated in 2015 to help avoid such energy troubles – it appears to be exacerbating them instead.

Then there were pressures in Mr. Scholz’s government, where Green party leaders made remarks in favor of Europe and the US pushing Germany to use the pipeline as leverage against Russian President Putin. .

Despite all the conflicts, observers believe the $11 billion pipeline, designed to deliver Russian gas while bypassing countries in Russia’s former sphere of influence, will go into operation when it overcomes the final bureaucratic hurdle – certification from a German regulator.

Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Research, said: “I think it will eventually be certified, but there may be conditions attached to continued access to the method. public transport throughout Ukraine”. “I think politics is going to play a role, potentially a pretty big one.”

As its name suggests, Nord Stream 2 runs alongside the original Nord Stream pipeline, which began operations in 2012. Unlike the older line, Nord Stream 2 is wholly owned by Gazprom, the national energy company. Russian giants.

Germany’s European partners are most concerned about potentially losing billions of dollars in annual shipping fees to Ukraine and other countries with pipelines once Nord Stream 2 comes online. The United States views the project as a threat to European security, making it easier for Putin to influence a region of the world where Americans have a strategic partnership.

“The United States views the Nord Stream 2 pipeline as a Russian geopolitical project that undermines the energy security and national security of a substantial portion of the Euro-Atlantic community,” said Karen Donfried, assistant Europe’s foreign minister, told reporters recently. .

Critics in Washington, led by Senator Ted Cruz of Texas, a Republican, have repeatedly sought to punish companies involved in the pipeline project to prevent it from being posted online. The Senate recently agreed to hold a vote next January Nord Stream sanctions In return, Mr. Cruz agreed not to impede the approval of dozens of President Biden’s nominations for State and Treasury Department positions.

Russia is Europe’s main supplier of natural gas, but this year’s import volumes are still below average. Analysts say Russia has already met the volume of gas agreed in the contract, but does not appear to want to supply more to European customers. This is an important issue because Europe needs gas. Storage facilities have entered the winter with unusually low fuel levels – partly due to increased global demand and the cold snap early in the year – and prices have skyrocketed.

“Russia has always said it is supplying everything under its contract, which seems to be true,” said James Waddell, head of European gas at Energy Aspects in London. “But what they don’t do is sell additional gas in the volumes that we’ve seen in previous years.”

Russia may be motivated by its hostility towards the Ukrainian leadership. For years, Soviet-era pipelines in Ukraine have served as the main European conduit for Russian gas, generating billions in freight revenue for the government in Kyiv. If Nord Stream 2 comes into operation, with a capacity of 55 billion cubic meters of gas per year, Gazprom will be able to sell more gas to European customers without having to pay shipping fees to Ukraine.

For German businesses, the pipeline is needed to ensure a reliable flow of energy, as the country prepares to bring its last three nuclear power plants offline. The issue has also become more pressing for Germany after the new government announced its intention to extend coal exports to eight years, to 2030.

Demand is particularly acute in the southern German states, home to industrial giants such as BASF chemicals, the carmaker Daimler and the Siemens group. Renewable energy from wind turbines is abundant in the North, and the government has pledged to speed up construction of high-voltage power lines to transfer that power to the South, but public resistance has hinder progress.

“We need a secure gas supply, despite all the obvious political differences with Russia,” said Siegfried Russwurm, president of the Federation of German Industries. He urged the new government not to mix business with politics, pointing out that Russia had begun supplying natural gas to West Germany during the Cold War, when the two countries sat on opposite sides of the Iron Curtain.

“There are issues we can approach together; there are issues where we can work together despite our differences; and there are points we disagree on,” said Russwurm, adding that the power supply is in the first category.

Currently, the company that owns the pipeline, based in Switzerland but wholly owned by Gazprom, is busy setting up a subsidiary in Germany, at the request of the German regulator to bring the pipeline into line. accordance with European Union law. Jochen Homann, president of the Federal Network Agency, said this month that he does not expect his agency to approve it before the second half of 2022.

The ball will then be shipped to Brussels, where officials at the European Commission have two months – possibly an extension of two months – to form their own opinions on the pipeline. Although the commission’s decision is non-binding, the German regulator is expected to review it, which could take several months.

Jacopo Maria Pepe, a researcher in energy and climate infrastructure at the German Institute for International and Security, says the idea of ​​Nord Stream 2 is that it acts as an insurance policy in times of gas prices. high combustion or energy crisis.

However, he warned that while stopping the pipeline would send a clear diplomatic message to Russia, it could make Germany the most powerful power in Europe. It could also make Berlin respect Moscow as the Germans support Ukraine with diplomatic efforts and economic investments, worth $49 billion by 2020.

“If we still need gas, we still need Russia,” Pepe said. “There is no way to escape this reality.”

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