The Pros And Cons Of Nord Stream 2

Authored by Vanand Meliksteian via,

There are few issues as divisive in the EU as the planned construction of Nord Stream 2, another direct gas infrastructure connection between Germany and the Russian Federation.

With the climate of relations between Russia and the West just above the point of freezing, the agreement between Gazprom and its Western counterparts Shell, OMV, ENGIE, Uniper, and Wintershall has caused critics of closer relations with Russia to mobilize.

While supporters of the project insist that it isn’t more than a commercial deal (mostly Western European countries and companies), opponents (Central and Eastern Europe) are convinced that the deal will give Moscow more unwanted influence.

Here, we’ll discuss the arguments of opponents and proponents of the proposed gas infrastructure in order to make a modest recommendation regarding Europe’s common interest.

Currently, over almost 40 percent of the gas consumed in the EU originates from Russia, making Moscow the biggest supplier, followed closely by Norway and Algeria. Even though many policy declarations were made to diversify and several serious crises involved Russia, the export of Siberian gas to Europe increased spectacularlyfrom 8 percent in 2017 to a record 195 bcm.

The most important reasons behind this growth are the expanding economy of the Eurozone and domestic gas fields that are producing less. Although Europe currently possesses 208 bcm of LNG capacity, of that just 51 bcm was used in 2016. Most of the capacity was idle due to much cheaper pipeline gas, especially from Russia.

Proponents, therefore, argue that Nord Stream 2’s importance will increase over the years as demand for imported gas will do the same. Furthermore, several crises over the years between Russia and Ukraine have severely damaged Europe’s energy security (and Russia’s, opponents argue). According to supporters, Nord Stream 2 will improve Europe’s position, as transit through Ukraine can be avoided and risks decreased.

Opponents, however, argue that it is exactly these crises that have shown Russia’s real intention and the necessity to import less from Moscow. Gas is not a commodity but a tool or weapon in the eyes of the Kremlin, they argue. Increased import will provide Russia with more means to pressure Europe in case of a crisis. Furthermore, this would withhold Ukraine from approximately 3 billion euros in yearly transit fees, thus weakening the country financially and its position to negotiate new contracts with Moscow.

While some Eastern and Central European countries have made strides in reducing their dependence on Siberian gas, the financial backing of Shell, OMV, ENGIE, Uniper and Wintershall for Nord Stream 2 is important in terms of resources and reputational improvement. This also supports the argument (primarily made by Germany) that it is a commercial and not a political project.

When it comes to Nord Stream 2, Central and Eastern Europe receive the support of the European Commission. The Commission has been trying to subvert the project, but until now has failed to do so. Its own legal department has rejected the claims of the commission to extend the existing acquis on energy law to Nord Stream 2.

Also, unbundling legislation — under which the majority owner of the infrastructure cannot be the same as the producer of the energy going through it — does not adhere, as the pipeline goes through the Baltic Sea, which is outside of the jurisdiction of the EU. While Germany has already granted a permit to construct the pipeline onto its shores, other littoral states of the Baltic Sea have yet to do so. However, even if this is not permitted, Gazprom could divert the route.

Although opponents are correct in assuming that Nord Stream 2 will weaken Ukraine’s position and that it is highly likely more gas will be imported from Russia, the overall effect on the EU is rather positive than negative.

This infrastructure does not diversify, as the source of energy is the same. However, increasing the options for import strengthens Europe’s overall position, as the recent explosion at the Baumgarten gas hub in Austria shows. Due to its strategic location in central Europe, the hub has a significant influence on gas prices on the European continent. The explosion caused a major disruption in gas flows from east to west, which influenced LNG prices as far as Asia.

The massive amount of idle regasification capacity shows that in times of crisis, Europe can import from a variety of sources when necessary. This was the case in the UK, which received the first commercial LNG cargo of the Russian Yamal project. Although the project suffered under sanctions, Novatek, together with Total and Chinese investors, finished the project on time and on budget. This shows that the current gas market is truly global and those policy goals and economic fundamentals collide in some cases.  

Europe's position vis-á-vis its energy suppliers would be much more improved when internal market restrictions are further dissolved, interconnectors built, and a truly coherent single energy market created.

Although Nord Stream 2 is majority-owned by Gazprom, all the infrastructure within the single market adheres to EU law, thus unbundling legislation. Due to this measure, Europe could receive energy for the lowest price available while maintaining a safeguard in the shape of idle LNG regasification capacity.

Finally, Ukraine should be able to purchase its gas from Europe instead of Russia for a fair price and without risking a crisis.

Maybe it’s time for a divorce between Kiev and Moscow instead of forcing cooperation on them. 


NiggaPleeze fx Tue, 02/27/2018 - 06:22 Permalink


That graph, assuming it's accurate (alleged sources:  EIA, the US energy agency, and Index Mundi), doesn't indicate how prices are determined.  Is it wholesale or retail?  Transportation included?  Spot price or long-term contract price?  Supply guarantees?  etc. etc.

It's doubtful that Europeans would be paying a huge subsidy to Russia for its energy, particularly in the current environment.  Hence study seems quite bogus.

In reply to by fx

giovanni_f hestroy Tue, 02/27/2018 - 05:40 Permalink

Russia will deliver gas to europe not for decades but for centuries to come. Long after the once-US will have broken up in pieces battling against each other for water, oil, gas, food and Europe will have become a lawless, partly-islamized shithole with ghettos from migrants from all over the planet.

At that time, btw, Ukraine will be again firmly integrated in the Sino-Russian Eurasian order. For its own benefit.

In reply to by hestroy

fx giovanni_f Tue, 02/27/2018 - 05:47 Permalink

The US will rather destroy the entire planet before allowing a truly multipolar world-order. And certainly before being relegated to a secondary power on the world scene.

And truth be told, Russia's longterm economic prospects do not look all that good at this point. Demographics, corruption, technological disadvantages, huge structural imbalances and the Western sanctions as well as the huge military spending (not in absolute terms, but as a % of GDP) that the USA is forcing upon them are strong headwinds.

China, btw, is as much an ally as it is a competitor and potential adversary of Russia. While they have a high interest in Russia not going under, at least for the next 2-3 decades, China is not particularly keen on a really strong Russia, either. From all that I have seen, the Chinese are actually taking full advantage of the fact that Russia is becoming ever more dependent on them as a market for its goods and as a facilitator of financing.

In reply to by giovanni_f

giovanni_f fx Tue, 02/27/2018 - 06:23 Permalink

"The US will rather destroy the entire planet before allowing a truly multipolar world-order. And certainly before being relegated to a secondary power on the world scene."

Correct. Domination or destruction is coded into the DNA of the Zio-Anglos. That is THE danger. The only reasonable positive scenario I can think of is the US to break up in pieces with every one of thm too weak to start a war.

In reply to by fx

just the tip fx Tue, 02/27/2018 - 10:13 Permalink

your second paragraph is choc full of common sense and should be an article of its own.

in 2020 the russian military is going to be majority muslim.  in 2050 the russian population is going to be majority muslim.  the former stat from numerous blogs, the later from the UNHCR reports.  the later is going to present some interesting issues politically as i don't think even 4D chess is going to matter by that time.  of course by that time someone may be playing 3482994732D chess, either that or checkers.…

what i don't understand is why these pipelines don't go into kaliningrad.  if either nordstream went into poland it could have the affect of pulling poland away from nato.  given the transit fees.  and russia would not have to worry about delivery points in foreign countries.  maybe russia really doesn't like kaliningrad.  they did try to sell K to germany back in 1990.  didn't go through.


but i think the russian military population is part of the reason VP is being so cautious in syria.  i think he is trying to establish some sort of counterbalance to shia/sunni/salaf islam.  what, i don't know.  but it stands to reason a russian orthodox islam may be in the works.  either way, his influence may be felt, but i don't see VP presence being that much of an issue in 2050.  lavrov is the one i like, moreso than VP.  but after them, i can't see past the curtain.


In reply to by fx

MK ULTRA Alpha giovanni_f Tue, 02/27/2018 - 05:59 Permalink

Some country will sabotage it. US LNG is being shipped to Baltic countries because no one wants Russian natural gas, only the communist soon to be out Germany's Merkel wanted it.

I will volunteer to sabotage the pipeline to remove this threat of Russian imperial coercion. It will be easier than on land in the Ukraine. The end of Russian natural gas to Germany is our strategic duty to the Fatherland. 

It's a victory over the Russian troll armies. Or even better, the Chinese cyber warrior armies, both pretending to be Americans in a determined attempt to control the mind of America. 

It's a Wonderful Life.


In reply to by giovanni_f

SoDamnMad Four Star Tue, 02/27/2018 - 05:35 Permalink

I question your numbers. First is you have American numbers at the hub which are not gas prices to a distributor is some state.  Are these prices to a large user like a major utility in a city (like Con Edison)?  Your pricing varies according to futures pricing. Russia signs pricing agreement over a long period.  US gas won't be piped to Europe any time soon but it will be compressed and sold for much higher prices to small European countries.  Russia hasn't found half the gas that exists under it's lands.  The US is looking for the last of the gas in far-off shelves and Alaska.

In reply to by Four Star

Rutalkingtome HowdyDoody Tue, 02/27/2018 - 08:57 Permalink

"Finally, Ukraine should be able to purchase its gas from Europe instead of Russia for a fair price and without risking a crisis".

"Maybe it’s time for a divorce between Kiev and Moscow instead of forcing cooperation on them"

This article is partial against Russia. Take for instance the first statement. Russia has been selling gas to Ukraine long under market price during long time. It has stopped doing that since Ukraine started (after the US inspired coup) killing ethnic Russians from the East.

Now the second: Russia does not want anything to do with Ukraine. Why? Because right now Ukraine is ruled by fanatical anti-Russian neonazis that collaborate with the US. Their only way for them to justify their existance is by harassing and killing Ukrainians (ethnic Russians) from the East to appease their masters (US-NATO) and to provoke Russians into a war that they prefer to avoid because they do not want to take over the res of Ukraine which is in economic and social collapse.

In reply to by HowdyDoody

Doom and Dust Tue, 02/27/2018 - 05:11 Permalink

The Americohens transparently want to make Europe dependent on their own more expensive LNG exports while front loading the development of Eastern Mediterranean gas fields so as to give Israel a large piece of the pie and cut off Russia.

These American tricks - seen one seen them all.

BritBob Tue, 02/27/2018 - 05:18 Permalink

The UK currently produces enough gas to meet almost half of its needs (43%) from the North Sea and the East Irish Sea.

We also import 44% of the gas we use via pipelines from Europe and Norway. The remaining 13% comes in to the UK by tankers in the form of Liquefied Natural Gas (LNG).

The Norwegians are in a position to export most of their gas as they can rely on hydro-electric power for most of their energy needs. Clever.

fx BritBob Tue, 02/27/2018 - 05:55 Permalink

" We also import 44% of the gas we use via pipelines from Europe and Norway"


gee, and apart from Norway, where do you think does the bulk of the "European gas" come from? From Russia, of  course.

Europe has very little gas production. Poland is experimenting with fracking, but we all know that fracking has very poor long-term economics anyway. And right now, the russophobic Polish idiots are seriously considering to rather buy US LNG for 2-3 times the price of Russian gas, than gas from Russia. And they seriously demand  that the other EU countries shall pay for this nonsense. The same EU countries, by the way, that Poland otherwise ignores, obfuscates or plain cheats and betrays in all dorts of areas.


In reply to by BritBob

SoDamnMad Tue, 02/27/2018 - 05:20 Permalink

Europe "could receive energy at the lowest price available". Yes they could but they won't.  Germany will replace Ukraine and receive the in-transit fees.   On 25 February 2009, the Germany's energy regulator exempted the OPAL pipeline from network access and transit fees regulation for 22 years after its launch. Nordstream I and II will feed Opal and NEL supplying GERMANY.  The Baltics and Poland get bypassed. The Baltics received the first US LNG and the price was Yuuge. Funny how the Brits had to get a shipment of the Yamal Russian LNG. Take it or freeze it.

JohninMK SoDamnMad Tue, 02/27/2018 - 05:55 Permalink

The big problem the EU has is lack of capacity in its north/south pipelines leading to the question of where is the gas for central and southern Europe coming from once the Ukraine transit route is closed as the Russians say it will at the end of the current contract in December 2019.?

NordStream2 was part of a plan including SouthStream into Bulgaria, but the EU/US stopped that.

They thought they had a better hand than they did over Russia. I don't think that they took into account the new revenue stream coming from the gas pipe to China co-incidently starting up at that same time meaning that Russia had no desperate need for the EU revenue.

This was a game of chicken and has turned into a total energy screwup by Brussels. They had better pray that the winter of 2019/20 is mild or that the Russians relent and keep supplying through Ukraine.

In reply to by SoDamnMad