Daily Outlook

Germany won’t abandon its massive gas pipeline with Russia yet

Germany has come under increasing pressure to pull the plug on its controversial giant gas pipeline project with Russia, following the suspected poisoning of Russian opposition politician Alexei Navalny. Experts say Berlin is unlikely to do so for now, however, given the Nord Stream 2 project is over 94% completed after almost a decade’s construction, involves major German and European companies, and is necessary for the region’s current and future energy needs.

In this case, economic and commercial interests could trump political pressure to punish Russia. Germany’s Foreign Minister Heiko Maas hinted last Sunday that Russia had to play its part during the investigation into the attack on Navalny. Germany has been reluctant to link the fate of its involvement with Nord Stream 2 to the Navalny incident so far, and Maas conceded that stopping the building of the pipeline would hurt not only Russia but German and European firms.

In a nutshell, Nord Stream 2 is a collaboration between Russian state gas firm Gazprom, and five major European energy companies, including E.ON, Shell and ENGIE, although Gazprom is the largest shareholder. The pipeline, reportedly estimated to cost around 9.5 billion euros ($11.3 billion) to build, will double the amount of natural gas that can be transported to Germany under the Baltic Sea (to roughly 110 billion cubic meters per year) and will run parallel to an existing pipeline, Nord Stream 1, that was completed in 2011. Russia was the largest supplier of natural gas to the EU, both in 2018 and 2019, according to the European Commission.

U.S. lawmakers are considering further sanctions on the project although, with 2,300 out of 2,460 kilometers of the entire (Nord Stream 1 and 2) pipelines having already been laid, there is not much time for those to have a significant impact if they are approved.

Germany won’t abandon its massive gas pipeline with Russia yet, analysts say, CNBC, Sep 14

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