Name: Nord Stream 2: Putin's pipeline with a problem | CNBC Reports
Uploaded: 2021-03-11T19:45:35.000Z
Duration: 9 min 26 s
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A series of gas pipelines  running between Russia 

and Germany is at the center  of an international dispute.

It's called Nord Stream 2, and as  its construction nears completion,

there's mounting pressure to put a  stop to this controversial project. 

In August 2020, a Russian political leader and opponent of Vladimir Putin,

being exposed to the  nerve agent Novichok.

The attempt on his life was allegedly carried out by Russian Federal   

Security Service agents on behalf of the Kremlin.

The assasination attempt  and Navalny's subsequent

jailing prompted condemnation  from political leaders around

the world and saw widespread  calls for increased economic

sanctions on Russia. It also led to renewed calls for German chancellor Angela Merkel

So Navalny puts an emphasis on Russia's mis-deeds and the question is, is Germany   

really going to support and again finish the silver platter pipe deal right as Russia

continues to do unacceptable things according to international norms?

Do you think Russia have arrested  Navalny to use him as a bargaining chip,

which they wouldn't have had  otherwise, that then releases 

them from sanctions and  gets the deal over the line?

Certainly, Navalny has been a thorn  in the side of the Putin administration    

for a number of years and these  things may not be connected.

What would be interesting though is if a  concession, by releasing Navalny, does 

help as an alternative to  putting sanctions on Russia.

Russsia denies being involved in the assassination attempt of Navlany and

denies that his subsequent arrest was politically motivated.

The Nord Stream 2 gas pipelines run beneath the Baltic Sea alongside the

first Nord Stream pipelines, which were completed in 2011. The pipeline enters the

Baltic near St Petersburg in  Russia and stretches 765 miles

again at Greifswald in north-east Germany. The new pipelines, which are due to begin

operating in early 2021, can carry 55 billion cubic meters of gas per year, potentially

doubling the capacity of gas which can be pumped directly to Germany from Russia.

While the Nord Stream 2 project is funded by a consortium of five European energy

companies from France, Austria,  Germany, Britain and the Netherlands,

Russian majority state-owned energy  company Gazprom is the sole stakeholder.

For Russia, how important is Nord Stream 2?

There are commercial interests  here at play that Gazprom

wants to monopolise and  there is a fear that now

increasing exports of LNG are  challenging the position of Gazprom.

The $11 billion project has, however, faced widespread criticism ever since

the deal was inked in 2015. Much of the opposition stems from the U.S., which   

worries that the new pipe will expand the Kremlin's influence in the region, while

several central and eastern European countries, are also concerned about

Another country strongly opposed to the project is Ukraine, which has been in a

protracted conflict with Russia since 2014. Before the completion of the first Nord

Stream pipelines, 80% of gas supplied by Russia to the EU went through the country.

However, the gas supply wasn't always reliable due to long standing disputes

between the two neighbors. While the Nord Stream projects are set to ensure a

steady supply of gas to the EU, Ukraine stands to lose lucrative transit fees.

We've had a situation of a political stand-off between the two countries and

they're very keen to channel  gas towards Europe

Even though Nord Stream  2 has been dubbed

the pipeline for  “Europe's energy future,”

Germany stands to reap the biggest rewards from the project.

Lower wholesale gas prices would give a significant boost to businesses

That's why many analysts believe that German chancellor Angela Merkel and

her government are keen to ensure that the pipeline is viewed as a commercial

project, entirely separate from politics.

Many in the German political  establishment don't see

a project that for political or economic reasons they find potentially beneficial

and I think the hope is that Germany's neighbours are going to move on.

They did with opposition to Nord stream one and they assume

But the biggest obstacle to the pipeline is the U.S. As far back as 1981, the

Reagan administration imposed sanctions on a similar pipeline project from Russia

to Europe. As Nord Stream 2 nears completion, history is repeating itself.

The Obama and Trump administrations deemed the pipeline a geopolitical threat,

and towards the end of 2019, the U.S. passed sanctions targeting companies

involved in the development in an attempt to scupper its completion.

Allseas, a Swiss firm specialising in undersea construction, immediately

buckled under the threat of sanctions and pulled its vessels from the project,

halting construction for a year and costing Gazprom a fortune.

Many other international companies were also deterred.

In the United States, the question of European gas pipelines is a foreign

policy question. In the last few years it has been portrayed more as an

economic question but we had sanctions against companies building

the pipelines to Germany in the early eighties from the United States.

So this is a story that really isn't a news story but a story that is coming up again.

So the US has a stance that this interaction between Europe and Russia

- this inter-dependence on gas is a strategic liability

and that it makes Europe more vulnerable.

At the start of 2021, the U.S. Congress expanded its sanctions net to include

insurers, certifiers and any companies supporting 'pipe-laying activities'.

As a result, 18 European companies have pulled out of the project so far.

The majority are companies insuring the project, but also civil engineering

companies responsible for running the pipeline's monitoring and safety systems.

Russia is trying to counter the sanctions dragnet by increasing its stake in the   

development infrastructure, allowing it more control over the construction, free

from the threat of U.S. interference. While this may mean they can finish

laying the pipe, certifying the project to meet international safety standards

isn't something Russia can pull off on its own.

One of the major issues is that the main certification company, DNV,

withdrew from the project. Now this project has all been built to those

standards of that certification company and we think that without that type of

certification it may become difficult for any European regulator to

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Nord Stream 2: Putin's pipeline with a problem | CNBC Reports

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