A whiff of trouble in the Nord Stream pipeline

News:  The Ukrainian authority has called the Nord Stream 2 project a ‘dangerous geopolitical weapon’.

There is also strong opposition from the United States and most of the European countries (except for Austria, Germany, Hungary, and the Netherlands).

What was meant to be an ordinary energy project has transformed itself into a powerful geopolitical tool, available to every stakeholder involved.

Why the Nord Stream 2 project is important for Germany?

It provides energy security for Germany

According to data from 2015, Germany has only around 10% of its natural gas resources from its own gas fields.

Moreover, Germany has set out a plan to shut down its nuclear and coal power plants, with the objective of gradually moving towards renewable sources of energy.

Furthermore, there is an energy crisis in Europe, whereby wholesale energy prices have more than doubled in 2021, and there is a limited supply of fossil fuels altogether

Diversify the sources: Apart from Nord Stream 2 project, Germany has plans to build its first LNG terminal to receive gas from Qatar, the U.S., and others.

What are the concerns raised w.r.t the Nord Stream 2 project?

US’s concern

Once operational, the project would render more leverage and bargaining power to Russia while dealing with Europe and its energy market.

The Trump administration feared that the pipeline would give Russia more influence over Europe’s energy supply and reduce its own share in the European market for American liquefied natural gas (LNG).

Some political experts view: They opine that Russia is trying to use Nord Stream 2 as a political weapon to put pressure on European security and ‘undermine the democratic resilience of European institutions.

Europe’s Concern: Russia has been blamed for the EU’s energy crisis. They opine that Russia had intentionally decreased its gas supplies to Europe, aiming to speed up the controversial Nord Stream 2 gas pipeline by European Union (EU) market regulators.

However, Russian President Vladimir Putin dismissed these concerns, saying that ‘Nordstream 2 is purely a commercial project.

Why the development of Nord Stream 2 project got delayed?

The project has undergone a series of sanctions and controversies. For instance, at the end of 2019, U.S. President Donald Trump imposed sanctions on any EU company that was involved in completing the Nord Stream 2 pipeline.

However, In July 2021, the U.S. and Germany reached an agreement to allow the completion of the Nord Stream 2 pipeline.

Earlier in May 2021, the Joe Biden administration decided to issue a national security waiver for the Nord Stream 2 AG. The main reason was apparently to restore trust and close cooperation between the U.S. and Germany.

What are the latest challenges hampering the development of Nord Stream 2 project?

Bureaucratic hurdle: Recently, Germany’s network regulator suspended the certification procedure for Nord Stream 2. It reasoned that it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organised in a legal form under German law.

Geopolitical: Amidst fears of Russia’s invasion into Ukrainian territories, some EU leaders have called for stronger actions toward the controversial pipeline from Germany, in the event of further military escalation.

Source: This post is based on the article “A whiff of trouble in the Nord Stream pipeline” published in The Hindu on 30th Dec 2021.

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