Construction of Russia’s Nord Stream 2 pipeline to Germany is bound to face further long delays, forcing Moscow to come to an agreement with Ukraine on future gas transits, a senior EU official said on Thursday.
The EUR 11 billion ($12 billion) project to build a gas pipeline from Russia to Germany has come under fire from the United States and several eastern European and Nordic countries, which fear it will undermine Ukraine, and its gas transit revenues, and increase the EU’s reliance on Russian gas, according to Reuters.
The Russian-led Nord Stream 2 company has said it still expects to finish the pipeline by the end of 2019, despite permits pending in Denmark and new EU rules that may change its operational model.
Klaus-Dieter Borchardt, a senior energy official at the European Commission, the EU executive, said “for me it’s a fact” that the project’s deadlines will slip, which will force Russia to negotiate with Ukraine on continuing to pump some gas via Ukraine.
“This is something that will bring the Russian side to the table,” Borchardt told a conference in Brussels. “There will be some years of delay and that is our trump card with Russia.”
The European Union is mediating talks between Moscow and Kyiv to agree terms for gas transits to Europe after their contract expires at the end of this year.
Completion of the 1,225 km (765 miles) pipeline under the Baltic Sea would offer Russian gas export monopoly Gazprom an alternative to pumping gas through Ukraine to Europe.
In addition to uncertainties over the pipeline’s route due to pending approval from Denmark, and how it will comply with EU rules, Borchardt said he expected that gas transits from Germany via the Czech Republic to other EU states would also not be in place by 2020.
A U.S. State Department official told the same panel in Brussels that Russia was pursuing the pipeline so that it would no longer have to rely on sending gas supplies via Ukraine.
“Ukraine’s bargaining position is very weak once Nord Stream 2 is built because then it becomes, as the Russians say, as it suits their interest,” Colin Cleary, the director for energy diplomacy for Europe at the State Department’s U.S. bureau for energy resources.
“They’re not crazy. It makes a lot of sense. They want to hurt Ukraine, they want to have a special relationship with Germany.”
Germany, the main beneficiary of the pipeline, has said it wants to ensure Russia continues to send gas supplies via Ukraine but has given no details on desired volumes or terms.
UNIAN memo. The Nord Stream 2 project envisages the construction and operation of two gas pipeline branches with a total throughput capacity of 55 billion cubic meters of natural gas per year from the coast of Russia through the Baltic Sea to Germany. It should connect Russia's Ust-Luga and Germany's Greifswald.
This 1,220km pipeline bypassing Ukraine is to be built next to the existing Nord Stream 1 pipe. The construction deadline is set before the end of 2019.
The project is being implemented by Russia's Gazprom in alliance with European companies – ENGIE, Uniper, OMV, Shell, and Wintershall.
Ukraine stands against the construction of Nord Stream 2 as it will most likely lose its status of a gas transit country, while possible revenue losses are estimated at billions of dollars. The project is also highly criticized by Poland and the Baltic States.