The calls to cancel the controversial planned pipeline Nord Stream 2 were coming from the US, Ukraine, and various EU member states, but it all fell on deaf ears. Nord Stream 2 is a reality, and no amount of US LNG dreaming appears to be changing this fact.
Germany needs Russian gas. Russian gas is substantially more cost effective than US LNG hauled all the way from the States, and at the end of the day, Angela Merkel needs Nord Stream 2 to keep her in power. Putin knows this, and so during his meeting with Merkel in Berlin, a confident Russian President laid down the positive economic realities for Germany and the precarious position of Ukraine gas transit.
Putin and Merkel did discuss a variety of hot button issues other than Nord Stream 2 including the war in Syria, the situation in Ukraine and Iran. But the most pressing issue discussed was Nord Stream 2.
Investors needed a strong signal that the project is a go…despite POTUS Trump’s rhetoric regarding the pipeline at last month’s NATO summit in Brussels.
The Trump administration has threatened to sanction European companies investing in Nord Stream 2, possibly as early as October. Washington says the Russian pipeline threatens European energy security, while Moscow points out that this latest US initiative to stop the project is nothing more than a shakedown to force European countries to buy American liquified natural gas.
The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris break down the meeting between Vladimir Putin and Angela Merkel, and how Nord Stream 2 dominated the agenda between the two leaders.
Ahead of this weekend’s meeting in Meseberg, near Berlin, Merkel came under significant pressure to tell Putin once and for all that the pipeline is off – or at least demand concessions in exchange for its continued construction.
The criticism came even from leading members of her conservative bloc. Manfred Weber, head of her center-right EPP group in the European Parliament, and Norbert Röttgen, chairman of the German parliament’s foreign affairs committee, signed a joint letter to the chancellor with politicians from other parties demanding that she call off the project. “European energy supply and solidarity with our neighbors speak against Nord Stream 2,” they wrote.
This, of course, comes in addition to the intense pressure from Germany’s Eastern European neighbors and Washington, who say the pipeline is a threat to Europe’s energy security because it will make the continent even more dependent on Russian gas.
But the ‘iron chancellor’ would not be moved. She stressed at her joint appearance with Putin that the project is still on, and Putin agreed. “Germany is one of our country’s leading economic partners,” he said.
But Merkel repeated her insistence, first made in April, that the new pipeline cannot be an excuse to bypass the existing gas route through Ukraine. Washington and Warsaw have said the purpose of Nord Stream is to punish Ukraine. “If Nord Stream 2 comes about, Ukraine must play a role in gas transit to Europe,” Merkel said.
But Putin insisted that such gas transit should only be based on economic rather than political considerations, cleverly repeating phrasing used about Nord Stream 2 by Merkel herself a year ago. “I would like to stress, the main thing is that Ukrainian transit — which is traditional — meets economic demands,” he said.
Russia delivered 53.4 billion cubic meters of gas to Germany last year, a figure Putin pointed out during the press conference with Merkel. This is up 13 percent from the year before, and makes Russia Germany’s largest gas provider.
While this might seem at first glance to make Germany “dependent” on Russian gas, as Trump said at the NATO summit, the details are more nuanced. While Russia is Germany’s biggest gas supplier, it provides only marginally more than the other two main providers – Norway and the Netherlands. Until 2015, each contributed roughly one-third to German gas supply. Now Russia has pulled slightly ahead, but is not yet dominant.
More to the point, gas only accounts for 23% of Germany’s primary energy use – and only 13.5% of the electricity generated at power plants. That means Russian gas accounts for just 4.3% of German power generation.
But while Trump was wrong to say Germany “is dependent” on Russian gas, he would not have been wrong to say the country is “becoming dependent”.
Germany is phasing out both nuclear and coal power. Renewables are developing rapidly because of the country’s Energiewende policy, but not fast enough to fill the gap this decommissioning will cause. Many expect gas to quickly fill the gap. And if more Russian gas suddenly comes flowing in, the country could very quickly find itself dependent on Moscow for energy.
The Nord Stream 2 pipeline, which would follow the route of an existing pipeline under the Baltic Sea, would more than double Germany’s Russian gas imports, from 53 billion to a maximum of 110 billion cubic metres. Much of that gas would likely then be sold on to the rest of Europe, increasing the whole continent’s dependence on Russian gas.
Despite these concerns, following this weekend’s Merkel-Putin summit investors seem confident the project is going ahead.