Nord Stream 2 in dire straits after French U-turn

File photo. A special crane stacks pipes weighing several tons each which will be used for the construction of the Nord Stream gas pipeline in the Sassnitz-Mukran harbour in northeastern Germany, 06 December 2016. The first sections of the 1,200 kilometer pipeline were delivered in late October 2016. Around 2,000 of a total 90,000 steal pipe components are currently being stored on the island of Ruegen. [Jens Bluettner/EPA/EFE]

France plans to back an EU proposal to regulate Russia’s Nord Stream 2 pipeline, its foreign ministry said on Thursday (7 February), potentially threatening its completion and dealing a blow to Germany which has been trying to garner support for the project.

The European Commission wants to extend its internal energy market laws to offshore gas pipelines before construction is completed, giving it a say over how the new gas link under the Baltic Sea from Russia to Germany is used.

In its current form, Nord Stream 2, fully owned by Russian state energy firm Gazprom, would not be compliant with tougher new rules foreseen for new infrastructure projects.

Diplomatic sources said earlier that Germany had been pressuring other European capitals to block the new directive.

“France intends to support the adoption of such a directive. Work is continuing with our partners, in particular with Germany, on possible changes to the text,” French foreign ministry spokeswoman Agnes von der Muhll said in a briefing.

Any delay in building the pipeline would create uncertainty for Gazprom’s partners: Germany’s Uniper and BASF’s Wintershall unit, Anglo-Dutch Shell, Austria’s OMV and France’s Engie.

The EU bloc is divided over the project. Eastern European, Nordic and Baltic Sea countries view the 1,225 km (760 mile) pipeline as holding the EU hostage to Moscow, while those in northern Europe, especially Germany, prioritise the economic benefits.

The EU Commission had been under considerable pressure to act as arbiter, until it passed the buck to member states to decide.

Commission passes the Nord Stream 2 buck to member states

The Commission asked the member states on Friday (9 June) for a mandate to negotiate with Russia an agreement on the Nord Stream 2 gas pipeline project. It is very likely to obtain permission, despite several Central European countries strongly oppose it.

Amendments to the Gas Directive put forward by the Commission and supported by the Romanian Presidency, change the definition of “interconnector” by including pipelines linking the EU to third counties, such as Russia. This, in essence, represents an obstacle for new pipelines to the Union.

Germany and the Netherlands, the main beneficiaries of the Russian gas to be delivered via Nord Stream 2, are opposing the new definition.

On the other side, Poland, Lithuania, Latvia and Estonia strongly oppose Nord Stream 2, mostly for geopolitical reasons.

To block the amendments, Germany needs the support of at least four EU member states, representing at least 35% of the Union’s population.

Apart from the Netherlands, who needs imported gas to compensate for the termination of its domestic production, Austria and Belgium back Nord Stream, because their companies are among the investors. The other two countries on the side of Germany are Bulgaria and Hungary. Bulgaria would like to receive Russian gas from Turkish Stream, a project similar to Nord Stream 2, and Hungary plans to import Russian gas transiting via Turkey, Bulgaria and Romania.

The combined populations of Germany, Netherlands, Austria, Belgium, Bulgaria and Hungary, is 137 million, 27% of the EU’s total population.

France’s defection is also surprising, because one of the financial investors in Nord Stream 2 is Engie, a French-led multinational company.

An EU source said earlier that France’s vote would be decisive, likely leaving Germany short of a blocking minority.

The European Parliament also opposes Nord Stream 2.

Dependent on Russia?

Opponents of the pipeline worry it will weaken support for Ukraine by depriving Kyiv of gas transit fees along the traditional route for Russian supplies, which fill over a third of the EU’s gas needs.

The US ambassadors to Germany, Denmark and the European Union urged EU members to vote against the pipeline.

“Cancelling the project would send a clear signal that Moscow cannot get away unscathed with its aggression against neighbouring states, and its meddling in our democracies,” they wrote in a joint op-ed published by Deutsche Welle on Thursday.

Chancellor Angela Merkel said Nord Stream 2 would not make Germany dependent on Russia for gas, stressing that Ukraine must remain a transit country.

“Do we become dependent on Russia due to this second gas pipeline? I say ‘no’, if we diversify at the same time,” Merkel told a news conference in Bratislava.

Uniper, which has so far spent about €600 million out of the €950 million it earmarked for the project, said its assumption was that Nord Stream 2 would still be realised.

“This is a project for the next decades and therefore, to a certain extent, independent of current events,” a spokesman for the group said.

German company 'fully committed' to Nord Stream 2 despite fear of US sanctions

The German company Uniper said it was “fully committed” to the planed Nord Stream 2 pipeline, despite “a very bad feeling” about US sanctions against Russia. EURACTIV Poland’s media partner “Gazeta Wyborcza” reports.

A spokesman for Wintershall said the group would closely watch any further developments.

If the proposed regulation musters enough support, negotiations on final draft rules could begin as early as next week.

US Senate on the offensive

Republican and Democratic US senators on Thursday unveiled a resolution calling for the cancellation of Nord Stream 2. President Donald Trump’s administration has been pushing against it.

US threatens EU companies with sanctions over Nord Steam 2, Turkish Stream

A transatlantic tiff over Europe’s natural gas supply came to the boil on Sunday (13 January), as Donald Trump’s ambassador to Germany threatened firms involved in a pipeline from Russia with sanctions.

At stake is a mixture of economic and security interests for …

The resolution calls for the pipeline’s cancellation and supports a multinational freedom of navigation in the Black Sea after Russia’s aggression against Ukraine in the Kerch Strait.

Leaders of the Senate Foreign Relations Committee said they would take up the resolution at their next meeting.

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