The Nord Stream 2 gas pipeline through the Baltic Sea is intended to transport natural gas from Russia to Europe, mainly to Germany. There are only 150 kilometres (93 miles) before the Baltic Sea pipeline is completed. Despite warnings from German politicians to impose further sanctions following a suspected poison attack on a Russian opposition figure, it is unclear whether construction works will come to a full stop.
The pipeline runs from Lubmin to Vyborg through the Baltic Sea and covers a total of 2,400 kilometres. But the construction work is on hold due to existing US sanctions. The work could be suspended in the wake of political conflict around the plight of Alexei Navalny, who has been receiving treatment in the Berlin Charité hospital. When and whether the pipeline can be completed has therefore become questionable.
The spokeswoman for the Russian Foreign Ministry, Maria Sakharova, accused the German federal government of an “information campaign” and warned against any form of politicization. She complained that Germany had not yet presented any evidence in the suspected poisoning case. Several high-ranking German politicians, meanwhile, suggested a moratorium, i.e. a temporary freeze on construction, calling for Russia to launch a full investigation on the predicament of the Russian opposition figure, who was flown to Germany for treatment at the end of August.
Germany needs natural gas – or fracking gas
There has been repeated criticism that the pipeline is making Western Europe dependent on Russia. Germany has been initiating an energy transition in the last few years and would like to phase out fossil energy generation as well as nuclear power. However, natural gas is still needed. There must be an interim solution until there is a form of renewable energy that meets the economic demand in Germany. According to the BP group, around 89 billion cubic meters of natural gas were consumed in Germany in 2019 by private and industrial entities and, since 1994, more than 70 billion cubic meters of natural gas has been used every year. But the proportion of natural gas from Germany itself is less than ten percent. This makes Germany the second-largest importer of natural gas worldwide.
Russia provides 40 percent of the natural gas to Germany, followed by 30 percent from the Netherlands and 20 percent from Norway. However, natural gas from the North Sea is decreasing. According to a spokesman for the German Energy Agency, Russia is a “strong pillar” for Germany and the European Union. An alternative would be to transport fracking gas from the USA to Germany via tanking vessels – but at a high retail price due to the expensive extraction mechanism.
International financial investors
Along with the Yamal pipeline and the Transgas route, Nord Stream 1 is one of three pipelines that are used to deliver natural gas from Russia to Germany. The existing delivery routes have an annual capacity of over 200 billion cubic meters. The total demand for natural gas in Europe is approximately 470 billion cubic meters per year. Nord Stream 2 appears to make sense in ensuring the supply of natural gas, as the existing delivery routes, in parts, run through Ukraine and Belarus. After a blockade in the gas dispute with Ukraine, it became apparent that this situation was very much to Russia’s advantage. It practically ensures that Germany does not look for alternative energy suppliers.
The gas group Gazprom supports the project company Nord Stream 2. The financial investors are not only the global groups Uniper, Shell, Wintershall DEA, OMV, but over 100 companies from twelve European countries, all in all, each of which is interested in building the pipeline. 50 of them are from Germany.
Green party calling for construction to be halted
The German Federal Foreign Minister Heiko Maas (SPD) said that if sanctions are imposed, “they should work as precisely as possible”. Would this be an indication that Nord Stream 2 would not be sanctioned? Maas announced that the German government would discuss an appropriate response at the European level. Like Chancellor Angela Merkel (CDU), he did not rule out consequences for Nord Stream 2. It is hoped that Russia will not force Germany to change its position on Nord Stream 2, Maas added. The SPD chairman Norbert Walter-Borjans said that Nord Stream 2 is a 90 percent completed infrastructure project. Sanctions should therefore be targeted and go in a different direction than ending Nord Stream 2. Brandenburg’s Prime Minister Dietmar Woidke (SPD) emphasized that Nord Stream 2 is important not only for Germany but for Europe. The alternative, fracking gas, has disadvantages in terms of environmental protection.
The Green Party, on the other hand, calls for an exit strategy from Nord Stream 2 and an immediate stop to construction. Green parliamentary leader Katrin Goring-Eckardt demanded that former Chancellor Gerhard Schroeder give up his seat on the board of directors of Gazprom, the one of Nord Stream 2. The parliamentary deputy of the Union parties, Johann Wadephul (CDU) made a similar statement. Two candidates for the CDU chairmanship strongly questioned the pipeline.
Left party against ending the energy partnership
Economic policy spokesman for the left-wing group, Klaus Ernst, chairman of the economic committee in the German Bundestag, said that if Nord Stream 2 came to an end, German gas customers would pay for it. He demanded that the German government remain in talks with Russia. The “process” primarily benefits the USA. However, it is doubtful whether transparent investigations into the alleged poisoning of Navalny in Russia would be possible, according to Ernst. The politician considers claims for damages possible in the event of a stop to construction.
By ending Nord Stream 2, the federal government would harm “its reliable reputation and would have to accept high claims in damages,” Ernst stressed. This would mean terminating a 50-year energy partnership between Germany and Russia, a step he called absurd. Before sanctions against Russia are considered, it must be “proven beyond doubt” who carried out the poisoning attack on the Russian opposition figure.
Russian President Vladimir Putin is not automatically responsible. Nor is it necessarily the Russian secret service, Ernst pointed out, adding that there must be a signal of protest. All the same, he added that there must also be an opportunity to return to normal.
Expert: Pipeline “not existentially significant”
Energy economist Marc Oliver Bettzüge from the Energy Economics Institute of the University of Cologne said that from an energy industry perspective, Nord Stream 2 is not of existential importance for the security and profitability of the gas supply in Germany or Europe. “In this context, Nord Stream 2 is a relevant but not a decisive addition to the energy supply in Germany,” said Bettzüge.
Nevertheless, the gas pipeline is advantageous for end consumers in Germany due to a procurement advantage of around five percent. The economic policy spokesman for the Union parliamentary group, Joachim Pfeiffer (CDU), thus argued that the second Baltic Sea pipeline would provide “another transport route for gas and thus improve our energy security”.
Outlook
From a legal point of view, it is difficult to use leverage to end the Nord Stream 2 construction project because the international group of investors is made up of private enterprises. Should Germany assert “overriding national interests” through the Foreign Trade Act, this would have to be justified. In addition, a legal dispute could break out in which the investors would possibly assert claims for damages. A total of 12 billion euros were invested in the construction project. The Greens spokeswoman Annalena Baerbock is open to compensating the Nord Stream 2 investors and is campaigning for a complete construction freeze. One should not shy away from a step such as sanctioning Nord Stream 2, she said.
Michael Harms from the Eastern Committee of the German Economy says: “All necessary permits at European and national level have been granted.” Economic stakeholders would be unsettled about legal and investment security if sanctions were imposed. In any event, work on Nord Stream 2 is still on hold due to the prevalent US sanctions.
