GAS SUPPLY

Pipe down on Nord Stream 2

Nordstrim Start of the second branch of the gas pipeline the Nord Stream (Nord Stream Nordstrim) between Russia and Germany passing on a bottom of the Baltic Sea. PUBLICATIONxINxGERxSUIxAUTxHUNxONLY 320009
Starting the second branch of the gas pipeline the Nord Stream.
  • Why it matters

    Why it matters

    It isn’t smart to choose one side only in the battle for market share between pipeline gas, liquefied gas or from fracking.

  • Facts

    Facts

    • The Nord Stream 2 expansion would double gas volumes pumped from Russia to Germany under the Baltic Sea.
    • Supporters say it is needed to make up for declining European gas production and the possible disruption of supplies through Ukraine.
    • Most Eastern European nations and the United States argue the proposed pipeline could ultimately limit supply routes and E.U. energy security.
  • Audio

    Audio

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There are some who argue that expanding the Nord Stream Baltic pipeline from Russia to Germany would threaten Europe’s energy security and the cohesion of the European Union.

Norbert Röttgen, the former environment minister and a member of the conservative Christian Democrats, says Nord Stream 2 “runs counter to the goals of European security policy.” And none other than easternmost member states like Poland worry it would harm E.U. solidarity.

Couldn’t we just turn down all the rhetoric a notch?

Gazprom, more than half owned by the Russian government, intends to send no more gas to Europe via Ukraine beginning in 2019.

The fact is that pipeline-bound energy provides a greater degree of mutual dependence between provider and consumer. Even during the Cold War, the Soviet Union was a reliable source for natural gas supplied to Europe. Today Russia is even more dependent on making gas deliveries, especially since its state budget has been hit so hard by low oil prices.

Another fact: A direct route between producers and consumers increases the security of supply and reduces prices. Currently Ukraine receives €2 billion in natural gas transit fees, or about $2.2 billion, and it intends to triple them. These fees are paid by private households and industry – also in Germany.

The Polish government, by the way, would be in favor of Nord Stream 2 if the pipeline passed through its territory and thereby produced revenues.

Gazprom, more than half owned by the Russian government, intends to send no more gas to Europe via Ukraine beginning in 2019.

The worry that Eastern Europe will be completely ignored in the transfer of gas is exaggerated in view of the failure of South Stream and Turkish Stream. Because it is possible to send gas in the opposite direction, the European Union could provide Ukraine with gas and simultaneously make use of that country’s storage capacities.

This requires a European gas network. The European Union should focus on this project. In the meantime, Italy – after its initial opposition – has decided to participate in the expansion of Nord Stream.

But the most important fact is that greater energy independence comes only by using less fossil fuel. Up to now, the European Energy Union has not been reducing its consumption of gas, but is simply heading toward other dependencies.

 

Nord Stream map Pipeline in the Baltic Sea-01 gazprom shell E.ON North Stream gas

 

Russian pipeline gas is supposed to be replaced by pipeline gas from Azerbaijan and liquefied petroleum gas from autocracies like Qatar and Algeria. Liquefied gas from Australia and the United States might come from democratic countries, but it is both expensive and derived from fracking. Gas that is indexed to the price of oil profits from low barrel prices — so liquefied gas and gas obtained through hydraulic fracturing are losers in the current development.

In short, with respect to climate protection there are good reasons against investing in fossil-fuel based enterprises – whether from pipelines or liquefied gas terminals.

But it isn’t smart to choose one side exclusively in the battle for market share between pipeline gas, liquefied gas or gas derived from fracking.

In terms of geopolitical strategy, Europe must instead increase its independence. This means it must reduce its imports instead of simply exchanging one autocrat for others.

For that reason, ambitious European targets for protecting the climate, a quicker exit from coal and a massive expansion of renewables are the most certain ways to promote goals — not fighting over the expansion of an existing pipeline.

 

To contact the author: gastautor@handelsblatt.com

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