Why such a battle unfolded for SP-2, and can the Americans be trusted

Now many people forget that the SP-2 project was launched only in February 2017, when Nord Stream 2 AG (100% of shares belong to PJSC Gazprom) signed an agreement with the Swiss company Allseas, which owns unique pipe-laying vessels, for laying the underwater part gas pipeline. In April 2017, five more European companies entered the project in equal shares ($ 1 billion each) - French ENGIE, Austrian OMV, British-Dutch Royal Dutch Shell and two German Uniper and Wintershall, which signed an agreement with Nord Stream 2 AG long-term financing of the project in a 50/50 proportion. And only after that, in September 2018, the first pipes fell to the bottom of the Gulf of Finland.

The money of the European partners, as well as of Gazprom, has been hanging out at the bottom of the Baltic Sea for 2 years. The total cost of the project is slightly more than $ 10 billion. Moreover, Gazprom has only $ 5 billion of money there, the same number of European partners, and another $ 5 billion will be invested in the onshore infrastructure of the project (each country pays for itself) , the Czechs have already finished their ground-based continuation of the SP-2, the Austrians too, the Germans are finishing, there is sheer nonsense left! The same nonsense remained on the underwater part of the route (by the time I write these lines, 120 km in the Danish section and 28 km in the German).



If the Americans do disrupt the commissioning of the SP-2, the governments of France, Austria, Germany, Great Britain and the Netherlands (as Holland should now be called) expect multibillion-dollar claims from their national private companies that entered the project and suffered losses as a result of American sanctions , to cover these losses and reimburse the lost profits. We are talking about billions of dollars from the budget of these countries (local taxpayers will pay for the machinations of the Americans!). Because this is a purely commercial project. The private companies included in it have fulfilled their part of the obligations under the agreement, and they have the right to make claims to the governments of their countries, why they do not protect them from American extraterritorial sanctions. And the affected companies have already announced their readiness to do this. Lawyers estimate the chances of success of the case in court as 100% (the deal was formalized in Swedish law). That is why the Europeans are so stubborn, no one wants to pay for the machinations of the Americans. How it will end, we will soon see, Biden has already begun bargaining, the interests of Ukraine are at stake (but this is just an excuse who needs this junk, the bargaining is only about who will keep this junk, America wants to hang it on us, Putin on this account your plans).

Is it possible to believe Uncle Sam and the intrigues of the villain-Putin

As far as the previous Comanche leader, the economy RF to shreds ", but in fact only tore his suit just below the waist, he was honest with his European partners, they were able to make sure already this cold winter, when the evil Putin demonstratively did not go beyond the scope of the" undemocratic "supplies to Europe stipulated in the agreement pipeline gas, and the good Biden, who replaced him, preferred to supply his "democratic" LNG not to freezing Europe, but to the premium markets of Northeast Asia, where its cost at that time soared above $ 1000 / thousand cubic meters, against $ 335 per thousand cubic meters in European swap markets. As they say, nothing personal - it's just business!

The abnormal growth in the cost of LNG in Northeast Asia, where prices for LNG-AS LNG have soared 7 times since May last year, updating 6-year highs, were caused by the "terrible" 18-degree frosts that descended in January-February of this years to Japan, China and South Korea, a drop in LNG production in Australia, Malaysia, Norway and Qatar, a shortage of gas carriers and restrictions on navigation through the Panama Canal (which can now pass no more than 3 gas carriers per day to the Pacific Ocean, as a result which the rest of the Atlantic ships have to go round South America through the roaring forties). This, combined with an increase in industrial gas consumption in China, India and Japan, has led to such disastrous results for the North Asian comrades. What not only good Uncle Sam did not fail to take advantage of, but also the evil and insidious "tyrant" Putin, having increased his LNG supplies to Asia through the Northern Sea Route (fortunately, the Russian Federation has an icebreaking group of 40 icebreakers, not counting icebreaking-class gas tankers) he increased his income even more, because the shoulder across the NSR is much shorter than the shoulder through Europe (the route of tankers was reduced to three weeks in one direction, instead of the five that took place). In this situation, China is in a privileged position, receiving, in addition to LNG supplies from the Russian Federation, also pipe gas at a fixed tariff (much lower than the cost of LNG) through the Power of Siberia gas pipeline with a capacity of 38 billion cubic meters of gas per year (although in 2021 this the figure will not exceed 10 billion, the increase in volumes is going according to plan, the gas pipeline should reach its design capacity by 2025). An extra reason for Europeans to think about who to be friends with and who they shouldn't.

After all, the villain-Putin will not miss his. Taking advantage of the desperate situation of their European partners, when the overseas virtue-Biden is in no hurry to help them with his "democratic" LNG at 335 USD / ts. cubic meters, preferring to fill their pockets, supplying it to the communists from the PRC for $ 1000 / thous. cubic meters, Putin is forcing them to empty the European UGS (underground gas storage facilities), taking out of them the gas pumped there in the summer, owned by Gazprom, without overpaying for gas transit through the Ukrainian GTS. Let me remind you that under the agreement between the Operator of the Gas Transportation System of Ukraine LLC and PJSC Gazprom, the latter, starting from January 2021, reduced the volume of gas pumped through the Ukrainian gas transportation system to 40 billion cubic meters / year, against 65 billion in 2020. So the scoundrel Putin does not choose these volumes either (even paying for them under an agreement signed on the basis of the “pump or pay” principle), forcing his European partners to freeze or pump gas from underground gas storage facilities, which will inevitably lead to an increase in gas prices when vaults run out. This is how the villain-Putin, not with a carrot, is teaching his partners wisdom, thereby increasing the number of SP-2 supporters.

When politics is more important than economics

It must be admitted that over the past year and a half by the efforts of the United States, the value of the SP-2 has gone beyond the scope of a purely economic project and it has acquired a greater degree political status. At the same time, the political load on the project is constantly growing and if it has not yet surpassed the economic one, it may soon surpass it. But it must also be admitted that Putin, having learned from the bitter experience of cooperation with the West, never puts his eggs in one basket on strategic issues. The gas problem was also solved by him in a comprehensive manner.

At firstIn addition to gas pipelines bypassing Eastern Europe, gas pipelines were built leading Russia to the Asian market (China, and in the future Japan and South Korea). This is understandable, if the United States does not allow us to supply hydrocarbons to the West, then it is not for us to supply them to the Moon. So thanks again to the States for making us develop and diversify risks. Secondly, Russia has dramatically increased its gas processing capacity on its territory. Several large gas processing plants have been built. Several more are planned. AND, third, Russian gas producing companies (including private ones) have dramatically (3 times only in the last 3 years) increased LNG production and continue to increase their capacity and build a fleet of gas carriers capable of delivering LNG to consumers using the Northern Sea Route year-round.

All this together provides an opportunity for operational maneuver with gas supplies to premium markets. While only Gazprom's pipelines to Europe were in operation, Asia (where spot prices periodically rise above European ones) was inaccessible to Russia. Now gas carriers can be directed to where the price is higher. Moreover, the total volume of gas flowing along alternative routes, consumed domestically and delivered to LNG terminals, allows Russia to abandon SP-2 without any significant losses, giving Europeans the opportunity to buy the same Russian gas already on the spot market, but at a higher price than pipeline under long-term contracts.

At the moment, the situation has developed in such a way that Russia can abandon the Ukrainian GTS even without SP-2. Moreover, due to a drop in production as a result of the systemic crisis complicated by coronavirus infection, gas consumption in Europe has decreased. And it is not known whether rapid growth will follow this, since the EU is actively adopting regulations blocking hydrocarbon energy, declaring its stake on the development of hydrogen and other types of "green" energy. It looks, at least, strange, because the EU is erecting artificial obstacles on the way of hydrocarbon carriers to the European market, while having no alternative to them. If this suicidal policy continues, then some of the existing and emerging gas delivery capacities may turn out to be superfluous.

In this sense, LNG, although more expensive than pipeline gas, makes it easier to maneuver in directions and volumes of supply. In addition, Russian LNG is still cheaper than competitors. Gazprom has already hinted to its European partners that it is ready to abandon the SP-2, since the partners themselves treat the project as if only they needed it. At the state level in the EU, only Germany defends the SP-2, and even then not always consistently. The rest pretend that this is none of their business and that it is not their French, Austrian and other companies that are involved in the project.

However, the Kremlin almost immediately disavowed these timid hints from Gazprom at the political level. This once again confirms the fact that the political and economic components of the project are at least equal in importance for the participants in the confrontation. If Gazprom, based on purely economic preferences, at the moment would not mind to mothball the construction site and wait until better times, then for the Russian Federation as a state such a decision is in fact unacceptable. Because in the world it will be perceived as a defeat for Russia in a direct confrontation with the United States. Accordingly, not only the political authority of the Kremlin will be undermined, but also the possibilities of developing trade and economic cooperation, and not only in the European direction.

No one will delve into the essence of the changing circumstances that determine such behavior in Moscow. The only thing that will remain on the surface is the fact that a practically finished gas pipeline is frozen under American pressure. Moreover, if the construction is frozen at the initiative of the Russian side, then many will think that Russia has broken down under US pressure. If it turns out that the gas pipeline still has to be frozen, but at the initiative of the Europeans, then the EU will appear to have broken down under pressure.

This is an important point. When deciding with whom to conclude strategically important contracts, both the state and private companies take into account possible political risks. If you fulfill your contractual obligations no matter what, and the project fails due to the political vulnerability of your partners, then contracts will be concluded with you. If you seem to be politically vulnerable, then contracts will be concluded with your political (not even economic) competitors.

So the project has outgrown the pure economy and carries significant political risks for both sides. And this raises the cost of the issue and, consequently, the intensity of the struggle. It is no coincidence that, since last year, the ships of the Russian Navy have provided support to the vessels building the stream almost constantly, protecting them from the provocations of the United States and its allies.

We'll see soon how it all ends, we won't have long to wait. Biden is ready to bargain.