Page 7 - GLNG Week 25 2021

GLNG COMMENTARY GLNG

The embattled Nord
Stream 2 project is
nearing its finish.

Enter Nord Stream 2 to divest Nord Stream 2 and possibly allow other
Other industry players suggested that Gazprom suppliers to use its 55bn cubic metre capacity.
might be inflating gas prices to put pressure on Divesting the pipeline is not such a hurdle.
EU governments to give its controversial Nord But as the pipeline runs from Russia directly
Stream 2 pipeline the greenlight. The embattled to Germany, Gazprom’s only choice to comply
project is nearing its finish, with Russian Presi- with third-party access rules would be to allow
dent Vladimir Putin recently having hailed the competing Russian companies to use it. Under
completion of pipelaying at the first of its two Russian law, only Gazprom is allowed to use the
strings. country’s gas export pipelines, and Moscow is
“Gazprom is effectively saying to the EU: ‘give reluctant to end this monopoly through fear of
us the green light for Nord Stream 2 and we will creating competition between Russian gas sup-
send you all the gas you need’,” Tom Marzec- pliers overseas, weakening its revenues.
Manser, lead European gas analyst at ICIS, told Nord Stream 2 is fighting the amendments
the FT. “‘Don’t, and we won’t. We’re not going to to the gas directive in court, but so far without
send the extra gas via Ukraine and you’ve seen success. German regulator Bundesnetzagentur
what that means for wholesale prices in a tight confirmed on June 24 that Nord Stream had
global [LNG] market.’” requested certification as an independent trans-
Nord Stream 2 has been beset by financial and mission system operator (TSO). But unless it
legal problems since its conception six years ago. manages to overturn the EU amendments, this
It was originally due to start pumping gas at the request will be denied.
end of 2019, but permitting delays in Denmark Gazprom could try to get around the third-
and US sanctions have held the project up. party access issue by holding auctions for Nord
Nord Stream 2’s prospects have brightened Stream 2’s capacity in Russia, while creating auc-
recently, however. The US Biden administra- tion conditions that in reality make it impossi-
tion in May waived additional sanctions against ble for any other companies to book space. But
the pipeline, a move widely perceived as a tacit the EU could argue that this practice does not
admission that the US can do little to thwart the follow the spirit of the law even if it follows the
project. Germany, an ardent supporter of Nord letter of the law.
Stream 2, is set to approve its launch later this Another risk is that the US does not lift its
year. It is expected that Biden will at some point sanctions. The existing ones could make it
ease the existing sanctions against Nord Stream difficult for Nord Stream 2 to obtain technical
2, possibly after trilateral talks with Moscow and certification to start operating. Norway-based High gas prices
Berlin. quality assurance firm DNV had been due to
High gas prices and low storage levels certify the pipeline but pulled out in early Janu- and low storage
strengthen the case for EU authorities to per- ary citing sanctions. levels strengthen
mit the project. However, if the pipeline really Even if Biden’s administration decides to lift
is the motive for Gazprom withholding supply, the sanctions, such a decision could be chal- the case for
the company risks convincing the EU that the lenged in either the House or the Senate. There is
threat that Russia poses to energy security is far bipartisan opposition to Nord Stream 2 among EU authorities
too great, giving the bloc a rational to restrict US lawmakers.
the pipeline. A third possibility is that Germany drops to permit the
its support for Nord Stream 2, which would project.
Remaining obstacles surely seal its fate. German Chancellor Angela
While the US softening its stance is a welcome Merkel’s support for the project has held firm
development for Gazprom, Nord Stream 2 despite multiple crises in Russian-EU relations
is not out of the woods yet. The pipeline still in recent years, including the poisoning of
faces a number of obstacles, one of which is EU Russian dissident Alexei Navalny last August.
regulation. However, Germans will vote in late September
Changes to the EU’s Gas Directive in 2019 for a new federal parliament, and the Greens,
apply the bloc’s energy liberalisation rules, which oppose Nord Stream 2 on environmental
including those on unbundling and third-party grounds, are expected by most pollsters to get
access, to pipelines to and from non-EU coun- the highest number of seats after Merkel’s own
tries. This could mean Gazprom would to have CDU/CSU alliance.™

Week 25 25•June•2021 www. NEWSBASE .com P7