Page 18 - FSUOGM Annual Review 2021

FSUOGM AUGUST FSUOGM

Is Nord Stream 2 good

for Europe?

The agreement between Berlin and Washington might be good news for all

involved, including Ukraine

EUROPE COUNTLESS officials and political commen- Despite concerns that Europe relies too much
tators have slammed the recent agreement on Russia for its energy, Russia remains Europe’s
WHAT: between Germany and the US that allows the largest gas supplier and there is good reason for
Nord Stream 2 will completion of Russia’s embattled Nord Stream this. While LNG may periodically become more
provide economic and 2 pipeline as a victory for Moscow and a defeat competitive than Russia’s pipeline gas, the latter
political benefits for for the West. is by and large the most affordable source of sup-
Europe. The project jeopardises European energy ply to many European markets.
security, leaves Ukraine at risk of increased Rus- These benefits extend to Europe as a whole.
WHY: sian interference and will give Russia greater In a study in 2017, albeit commissioned by the
It will provide extra political influence both in Berlin and Brussels, Nord Stream 2 operating company, the Euro-
low-cost gas to support its critics say. Yet it is also worth looking at the pean Economics Institute estimated that the
Europe's post-pandemic potential economic benefits that Nord Stream resulting drop in LNG imports thanks to Nord
economic recovery, and 2 could bring about, both for Germany and Stream 2’s operation would result in a 13-32%
the agreement between Europe, not to mention the improvement in reduction in wholesale gas prices in Europe.
Germany and the US that Western unity now that Berlin and Washington Critics of Nord Stream 2 often argue that Rus-
allows the project to go have reached a compromise. The agreement sia can abuse its dominant position in the Euro-
ahead is good for Western is of course very good news for Russian Presi- pean gas market for commercial or political gain.
unity. dent Vladimir Putin. But an argument can be And there are many precedents for this kind of
made that it is also beneficial for all parties, even behaviour. But thanks to concerted EU efforts
WHAT NEXT: including Ukraine. over the years to expand gas infrastructure and
It will be up to the EU liberalise the market, it is more difficult for Rus-
to compensate Ukraine Economic benefits sia to act in this way.
for the lost gas transit It is no surprise that Germany has remained Europe has opened a number of new LNG
revenues, and the staunchly supportive of the pipeline, despite US import terminals and cross-border pipelines
announcement of a pressure and several crises in political relations over the past decade, providing alternative
new green fund for the with Russia over the years. Having more low- sources of supply to markets that once relied
country seems to fulfil cost gas supply will help the German economy on Russia for all of their gas needs. Further-
that role. rebound from the pandemic, particularly in its more, Gazprom can no longer include destina-
chemicals and other manufacturing industries. tion clauses in its contracts and must provide

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