The gas crisis in Europe
Russia is the main supplier of gas to Europe; Ukraine would be the main loser of Nord Stream 2.
Europe, like many other parts of the world, is currently experiencing an energy crisis. So far this year, the price of natural gas has risen by 110%, while the price of Brent oil, which is mainly extracted from the North Sea, has risen by 50% on the continent. Moreover, for the first time in almost two years, the price of a barrel of Brent crude has reached 80 dollars. Coal is also in a critical state, as India, one of the main producers, is suffering from a shortage of coal.
However, Europe, despite experiencing a sharp rise in energy prices, is not suffering the same severe effects as China, where electricity rationing has already begun. Even so, natural gas reserves are at historically low levels. According to Gas Infrastructure Europe, natural gas storage currently stands at around 76%, while at this time last year it was 95% full. On the other hand, some countries such as Austria have warned of a possible blackout that could last for weeks. "The question is not whether there will be a major blackout, but when," said Austrian Defence Minister Klaudia Tanner. The German authorities have followed in the footsteps of their neighbours and have opted to provide guidance to citizens in the event of such an occurrence.
In this sense, Europe must look for ways to deal with this energy shortage that could have serious consequences. "Europe has to import around 70 per cent of the gas it needs, and this proportion is expected to increase in the coming years," the EU said in a 2020 communiqué. Most of this gas comes from Russia, specifically the state-owned monopoly Gazprom. Gazprom is also the world's largest natural gas company with 158.2 thousand kilometres of pipelines. The current political situation between the European Union and Russia is conditioning the delivery of this energy commodity.
Recently, the Bundesnetzagentur, the agency that regulates the energy sector in Germany, has suspended the certification procedure for the Nord Stream 2 pipeline. According to the institution's statement, the Swiss-based company in charge of the project will only be able to obtain validation if "it is organised in a legal manner in accordance with German law". According to the Agency, the company managing the German part of the project does not comply with German law and does not meet the requirements of the German law to be considered an "independent" operator.
It has also stressed that the pipeline cannot start operating without this approval, otherwise penalties could be imposed. "A certification of the Nord Stream 2 pipeline operator can only be considered if the operator adopts a legal form under German law," the agency said. Following the German agency's announcement, the price of gas on international markets rose by 15.24%. Gazprom was also affected, as its share price fell by 2%.
The pipeline could solve part of Europe's current energy problem, as it would bring twice as much gas to Europe, potentially supplying 26 million households. "Certification is proceeding rather slowly; the project is most likely to be launched at best by the end of the heating season," Dmitry Marinchenko, head of the natural resources and commodities group at the Fitch financial group, told TASS. However, experts say that the start of operation could be postponed until next summer.
This decision, Konstantin Kosachyov, deputy speaker of the Russian parliament's upper house, told the Russian news agency, "does not benefit the European Union". Russian President Vladimir Putin has previously stated that Nord Stream 2 would be "undoubtedly an absolutely beneficial project for the European economy".
On the other hand, Russian authorities have also expressed their understanding with the German decision, arguing that licensing the pipeline is a "complex process". Kremlin spokesman Dmitry Peskov said he saw "no political motives behind this measure". With the temporary suspension of Nord Stream 2, Europe is currently only supplied by the Yamal-Europe pipeline, which runs through Belarus, Poland and Germany, and the one through Ukraine.
Nord Stream 2 is a pipeline of the gas giant Gazprom that aims to supply Western Europe with gas from the Baltic Sea without passing through Ukraine. The project was launched in 2005, following an agreement between Putin and former German Chancellor Gerhard Schroeder. Work on the mega-project, which runs along the bottom of the Baltic to the coast of northern Germany, was completed in September with 1,224 kilometres of pipeline built. In terms of financing, an investment of 2.5 billion dollars is estimated. However, since its inception, this pipeline has created controversy among European countries, despite the fact that some European companies participated in its construction, such as OMV, Wintershall Rea, Engie, Uniper and Shell. For this reason, due to its great political weight, Nord Stream is no longer just an energy project.
Some states have pointed out that Nord Stream 2 will lead to negative dependence on Russia, especially now, when ties between Brussels and Moscow are not at their best due to, among other things, the migration crisis on the Belarusian-Polish border. Moreover, the poisoning of opposition figure Alexei Navalny last year caused a deep rift between the two powers. The EU sanctioned several Russian officials and expelled three diplomats from EU territory. Moreover, the subsequent conviction of Navalny reignited tensions.
In this sense, it is also necessary to highlight the case of Ukraine, one of the countries that would be most harmed by the implementation of Nord Stream 2. If this pipeline begins to operate, Russian gas would no longer pass through Ukrainian territory, which would mean that Kiev would lose millions of euros in transit rights.
This project "poses new challenges to Ukraine in addition to those that already exist", warned Ukrainian President Volodimir Zelenski during a summit in Kiev last October with several European authorities. "'Energy security is crucial for Ukraine's independence. It is necessary to develop a common long-term vision of energy security in Europe," he added.
Ursula von der Leyen, President of the European Commission, and Charles Michel, President of the European Council, said they would strengthen cooperation between Brussels and Kiev. The two top EU leaders also announced that they were working "on energy independence, which is vital for Ukraine and for the European Union".
Zelenski has also accused Moscow of altering the quantity of gas at times, going so far as to define Nord Strem 2 "as a weapon". "I think that not warning that this is a dangerous weapon, not only for Ukraine but for the whole of Europe, is a mistake," the Ukrainian leader said at a meeting with Angela Merkel in August. At the meeting, Merkel assured her partner that Europe would not allow Putin to use gas as a "political weapon", and even threatened sanctions against Moscow in the event of an energy blockade against Ukraine.
The wounds opened by the Donbas conflict between Russia and Ukraine have not yet healed. The region remains the main point of contention between the two countries, a dispute that has spilled over to the EU, which has not hesitated to take a pro-Kiev stance against Moscow. Brussels also criticised Russia's annexation of Crimea in 2014, a process it considered 'illegal', as did many other countries, including the US.
Washington has also shown its support for the Ukrainian government in this dispute, due in part to the strong enmity it maintains with Moscow, accentuated especially since the arrival of Joe Biden to the presidency. The current relationship between the United States and Russia has come to be known as the "New Cold War" due to the strong tensions between the two powers.
In this context, Washington, in addition to backing Kiev, has also spoken out on the controversial Nord Stream 2 pipeline on several occasions. The US opposes this project because, as it has pointed out, it will serve Russia to expand its dominance over Europe. It also sees Nord Stream 2 as a strong competitor to US natural gas. So what is Washington's main goal - to protect Europe from this "Russian influence" or to defend its interests while harming Moscow?
The US Senate, under the administration of former President Donald Trump, approved sanctions against companies related to the construction of the pipeline, some of them, as noted above, European. The former president called this project a "tool of coercion" and warned that Germany could become a "hostage of Russia".
As was to be expected, the Old Continent criticised the US decisions for meddling in European affairs. Merkel disagreed with the 'extraterritorial sanctions', while German Foreign Minister Heiko Mass called the sanctions 'interference in autonomous decisions taken in Europe'. On the other hand, Russia, the main party affected by the sanctions, assured that it would continue to develop infrastructure "regardless of anyone's sanctions".
The change of presidency did not alter the US position on the Russian-European pipeline. Despite Joe Biden's attempts to disassociate himself from his predecessor's actions, in many cases he maintained the same foreign policy. The current president followed Trump's lead on issues such as China and Russia, which is why he was also critical of Nord Stream 2. However, he stressed the need to protect Ukraine's energy supply.
Warsaw stands with Kiev and other northern countries on Gazprom's gas pipeline. In an interview with the German newspaper Bild, Polish Prime Minister Mateusz Morawiecki said that "Nord Stream 2 must be stopped". Morawiecki urged Germany to stop giving "additional" money to Russia by buying gas from it. "We need to work together for peace, and not give President Vladimir Putin additional money in the form of payments for energy resources, with which he can continue to build weapons," the Polish prime minister commented.
Morawiecki's comments come shortly after accusing Russia of being behind the current migration crisis on its border. The Polish leader pointed to Putin as the "mastermind" of the hybrid attack on the EU border. Last week, thousands of migrants, mostly from Iraq, arrived at Poland's gates after the Belarusian authorities allowed them to cross into the area. Now, all these people, including many children and babies, are trapped in no man's land, as Poland will not allow them to move forward and Belarus will not allow them to move back. Due to the low temperatures, several people have already died of hypothermia. The Iraqi government has already taken action; Baghdad has chartered a repatriation flight for their nations from Belarus.
However, although this situation has now gained a high media profile, this challenge is something that the Baltic countries, along with Poland, have been grappling with for several months. For this reason, Lithuania, Latvia and Estonia have taken a stand with Poland in this dispute.
Due to sanctions and criticism from Brussels against Belarus over the migration crisis, Alexander Lukashenko has even threatened to suspend the flow of natural gas. "We provide heat to Europe and they defy us by closing the border. What happens if we block the transit of natural gas? I would advise the leaders of Poland, Lithuania and other stupid people to think long and hard before doing something like that," the Belarusian leader told state news agency Belta, further escalating the escalation between Minsk and Brussels.
Despite the serious threats, EU economy commissioner Paolo Gentiloni has assured that the EU "will not be intimidated". However, Lukashenko's words have turned into deeds, as "Gomeltransneft Druzhba", the Belarusian pipeline operator announced on Wednesday that it had reduced gas supplies to Poland for three days due to "unscheduled maintenance work", TASS news agency reported.
However, Lukashenko cannot act alone on this issue and needs the approval of Putin, the Belarusian regime's main international backer. The Russian leader has already announced in an interview with the Russian channel Russiya 24 that unilateral decisions by Belarus could affect political relations between the two countries. "The Belarusian closure of gas transit to Europe will be a violation of our transit counter, I hope it won't come to that," Putin warned. The Russian president has also opted to increase gas supplies via the Yamal-Europe pipeline. According to TASS, last week's gas volume rose to 860,000 cubic metres per hour, up from 360,000 cubic metres per hour. Putin has also criticised Europe for the current energy crisis. During a session at the Russian Energy Week forum, the Russian president pointed out that this situation is due to "unpredictability in stockpiling reserves".
In this context, the US has again warned against Russian plans to use energy as a "weapon". "I think we're getting close to that line if Russia actually has the gas to supply and chooses not to, and it will only do so if Europe acquiesces to other unrelated demands," warned Amos Hochstein, energy coordinator in the Biden administration. Hochstein is a key opponent of Nord Stream 2 within the US government.
As Europe enters winter, high energy prices are wreaking havoc on the economies of households and businesses alike. Despite the temporary suspension of Nord Stream 2 and the political wrangling, Russia will remain the main supplier of gas to Europe. Even so, the EU's distrust of Russia remains latent, even going so far as to accuse Moscow of being behind the energy crisis. Forty members of the European Parliament urged the Commission to launch an investigation into Gazprom and its possible withholding of gas in order to put pressure on the continent to approve the operation of Nord Stream 2. Although some experts and politicians have also raised the possibility that Russia itself is experiencing a gas shortage and is therefore trying to manage its own reserves.
