The battle for Nord Stream 2 is not over

The battle for Nord Stream 2 is not over

By A.Rozanov


One of the main requirements put forward by Washington in relation to the project of North Stream-2, was the preservation of transit through Ukraine. This requirement is quite understandable and is associated primarily with significant amounts coming into the Ukrainian budget for transit. Otherwise, the allies of Ukraine would have to compensate for these losses.
On this account, some Russian experts say that the Ukrainian gas transportation system will continue to be used by Russia for supplying blue fuel to Europe. This is due to a significant increase in gas consumption in Europe. As they believe, Europe’s demand for gas will grow with a decrease in supplies from its own fields by about 70 billion cubic meters. m per year. Half of this volume will be accounted for the supply of Russian gas. The Ukrainian gas transportation system (GTS) consists of six gas pipelines through which up to 180 billion cubic meters can be transported. m of gas, of which three are now used. We are talking about the transit of 90 billion cubic meters. From this point of view, the launch of the Nord Stream - 2 by 2020 could make the transportation through Ukraine unnecessary. But here we must take into account two factors. On the one hand, the transitional period associated with the launch of Nord Stream - 2 and bringing it to design capacity. During this period, the Ukrainian GTS is indispensable. On the other hand, Europe’s growing need for gas will require the use of transport through Ukraine. Otherwise, Russia would have to build another gas pipeline through the Baltic Sea.


The main problem today is the lack of agreement between Gazprom and Ukrainian Naftogaz on the terms of delivery. This agreement is hampered by the decision of the Stockholm Arbitration Court against Gazprom. We are talking about a fine to Gazprom for the inadequate transit of gas, although the volumes of the required transit were not specified in the contract. Apparently, it was Ukraine’s withdrawal of claims against Gazprom or the revision of this decision of the Stockholm Arbitration would create conditions for concluding a new agreement on the use of the Ukrainian GTS for the transit of Russian gas.
As is known, the Commission of the EU joined the solution of this problem. On January 21, the second round of trilateral talks between the Russian Federation, the European Commission and Ukraine began. The theme is the fate of the transit of Russian gas through Ukraine after 2019. Russia is represented at the talks by Energy Minister Alexander Novak and Gazprom Head Alexei Miller, the European Commission is represented by EC Vice President Marosh Shefchovich, and Ukraine by Foreign Minister Pavel Klimkin and Naftogaz Head Andrei Kobolev. Recall that the first round of talks was held in July 2018 in Berlin. The three parties then agreed to create an expert working group to discuss all the issues of gas transit after 2019. Experts gathered twice in September and discussed the management of the Ukrainian gas transportation system, aspects of Ukrainian and European legislation, gas transit tariff rates, and also assessed the EU gas needs for the next 10 years. This time, the European Commission intends to receive firm commitments from the Russian Federation and Ukraine regarding transit. The current gas transit contract between Gazprom and Naftogaz expires at the end of 2019, which follows from the announcement by the European Commission on a new round of negotiations. But at the turn of 2018-2019, a new factor appeared in the EU that could have a negative impact on the implementation of the Nord Stream 2 project.

We are talking about changing the Third Energy Package. Or its distribution, including to offshore gas pipelines that do not pass through the territory of the EU member countries. In this case, the “Nord Stream - 2” will also fall under its action. In 2017, the European Commission proposed to change the EU legislation (Third Energy Package), so that its norms apply to gas pipelines from third countries. But since that time, the approval of the draft directive has hardly progressed. For its adoption requires the consent of the European Parliament and the Council of the EU. The Committee of the European Parliament in March 2018 gave the green light to the proposal.
But at the ministerial level, it was stuck. The reason is that the state that chairs the EU Council determines what to do with this or that legislative proposal. In 2018, these were Bulgaria and Austria, which actually blocked the promotion of the draft directive. But since January 1, 2019, Romania is presiding over the EU Council, and it has actively got down to business. Bucharest offered his own vision of the document. In January 2019, the issue was discussed at the level of the working group in the EU Council. But in the EU there is still no consensus on this issue.
Also, one of the reasons for the delay was the lack of the necessary majority for the adoption of the changes made by the European Commission. This requires the support of 16 of the 28 countries that represent at least 65% of the EU population. And the European Union is split over this. As is known, Poland and the Baltic countries see the Nord Stream 2 as a security threat. Germany, like Austria, the Netherlands and Belgium, has a positive attitude to the project, although they make reservations in Berlin. For example, it is believed that new supply routes are needed. Specifically, we need new LNG terminals. We need new pipelines and countries that would ensure Europeans security of supply. It is emphasized that for Berlin it is important to continue the transit of gas through the territory of Ukraine. So far, the proposal of the European Commission is supported by at least 12 states. A number of countries have taken a wait. Romanian Foreign Minister Theodor Meleshkanu said his country would vote for the draft directive if there is a majority in its support. Bucharest's position to try to find a consensus acceptable to most states. The key point for Romania is finding the support of France. If she votes against or abstains, there will not be a majority sufficient to make a decision. For the time being, Paris has declared that it is testing the consequences of the proposed changes for the Franpipe pipeline, which supplies gas from fields in the Norwegian part of the North Sea to France.


In the Romanian version it is indicated that innovations should be understood as not affecting the pipelines from the fields. This may be an attempt to withdraw Paris reservations about Franpipe. According to the European Commissioner for Energy Maros Shefcovic, the draft Romania takes into account all the comments made by different countries. Now Romania is still looking for a compromise with other countries.
Experts expect that France is mainly in favor of extending the EU’s right to gas pipelines from third countries. On the other hand, Paris supports the Nord Stream 2. Therefore, the directive can be taken in such a way that it does not interfere with this pipeline. Many experts believe that they are unlikely to accept anything that will adversely affect the Nord Stream - 2.
They argue that in practice the extension of the EU gas legislation to the Nord Stream 2 means that the operator of this pipeline must be a company separated from the company producing and selling gas. In addition, access to the pipe should be open to all interested companies. Finally, tariffs should be regulated transparently.
As previously reported, the fulfillment of all these conditions will not mean the shutdown of the Nord Stream 2 project. But this may delay it, in particular, due to the fact that the implementation of the requirements will have to be fixed by an intergovernmental agreement between the Federal Republic of Germany and the Russian Federation. And time is of great importance, first of all, since the current contract on gas transit by Ukraine from Russia to the EU ends on December 31, 2019. Now negotiations are underway between Kiev, Moscow and Brussels on a new transit contract. The fate of Nord Stream 2 will strengthen the position of one side or another, since the launch of the gas pipeline will allow Russia to transfer part of the gas going to the EU through Ukraine.
But the battle for "Nord Stream - 2" is not over yet. The European Parliament adopted a resolution demanding to halt the construction of Nord Stream 2. One hundred European parliamentarians shortly before this, they addressed a letter to the German Chancellor Angela Merkel, in which she was accused of being splitting Europe with her adherence to Nord Stream 2.

It is noted that it is Berlin that increasingly isolates itself from Europe in this matter. Persistently not wanting to take seriously the fears of many Europeans that Moscow may use additional gas pipelines as political means in an effort to disunite European states and put pressure on them, Berlin discredits its - in words - passionate commitment to multiculturalism, which it is supposedly opposing globally unilateral arbitrariness of US President Donald Trump. Formally, the federal government constantly points out that Nord Stream 2 is a purely economic project. All attempts to give adherence to the Nord Stream - 2 for the act of resistance to Trump’s claim for world leadership are just misleading. The desire to prevent Western investors from investing in the Russian oil and gas industry used by the Kremlin for political purposes is supported by all parties in the US Congress. Including those forces that want to strengthen the Transatlantic Alliance and see Russia's aggressive policy as a serious threat to Western democracies as a whole. By adopting the US Security Protection Against Kremlin Aggression Act, which imposes the imposition of appropriate sanctions, the US Congress specifically created the legal framework to prevent Trump from concluding any agreements with Putin at the expense of the Western allies. If Germany undermines the united western front against Putin, then it will not weaken Trump, but his internal political opponents adhering to transatlantic views.



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