Having completed his three-month odyssey, the Academician Chersky stands in a German port on the island of Rügen, where the Fortuna construction and assembly barge was previously seen. There is also the logistics terminal of the Nord Stream-2 project, where large diameter pipes are currently being delivered. Obviously, preparations are under way for the completion of the remaining part of the underwater gas pipeline.
In parallel with this, overseas in the USA, according to the publication of Atlantic Council, are preparing to impose new sanctions against Nord Stream-2 if the pipeline is put into operation. What options will Gazprom face then?
It is now customary to draw parallels between Nord Stream 2 and the events of half a century ago, when the USSR pulled the first gas pipeline to Europe through Ukraine. Washington then also severely pressed in all directions, demanding that Europeans buy American coal. Today it is LNG, but the tasks and methods for solving them have remained the same.
First, Denmark’s paperwork was stretched out over the years, then Brussels adopted amendments to the Third EU Energy Package, which left the gas pipeline half empty. Berlin was able to throw an exception to this rule, but it was necessary to have time to complete the pipe before May 2020. In December 2019, the United States imposed sanctions on Nord Stream 2 contractors, who immediately abandoned it, breaking all deadlines. The Federal Grid Agency of Germany rejected a new application by the project operator to withdraw the gas pipeline from the scope of the directive. This means that one of the two pipelines runs the risk of remaining empty, and the payback period of the investment is at least doubled.
Now, Gazprom, which does not have the relevant experience, will have to independently lay the offshore part, and then face the possibility of falling under new US sanctions, as stated by US Senator Ted Cruz. The problem is that it is not yet clear exactly where to expect the trouble, which was rightly pointed out in the relevant committee of the Russian State Duma:
It is unclear whether they will be against the companies that own this pipelayer, or against Gazprom and the five leading oil and gas companies in the world. Or maybe against the German government, which buys gas?
Already, experts name several options that Gazprom can use to still push through its project.
At first, it makes sense to go to court, arguing that applying the Third Energy Package to offshore gas pipelines does not make sense, since there is no other pipeline or LNG terminal 12 nautical miles from the German coast. Some time ago, this worked for the Opal branch, but later Warsaw intervened. In this case, the European “swing of justice” will swing from side to side, and Nord Stream-2 will really turn into a backup gas pipeline for the EU, which will be loaded to the maximum as necessary, for example, in cold winter, or left half empty.
Secondly, the monopolist may try to circumvent the directive by agreeing with consumers to move the gas delivery point from Austria to Russian territory or to the sea 12 miles from the German coast. Not the fact that everyone will be ready to meet the company.
Thirdly, Gazprom can simply fulfill the requirements of European standards: give control of the offshore part of the pipeline to another operator, liberalize the gas market, giving access to export to NOVATEK and Rosneft, which we told earlier.
Finally, a compromise may be putting up 50% of the Nord Stream-2 free capacities for auction, where the state corporation itself can take advantage of them.
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