“Nord stream-2” will strike back

Germany strikes at “Nord stream-2” with the European gas Directive. However, this does not mean that Gazprom will not be able to use the pipeline now.
The step has been taken. The German Federal grid Agency still refused to exempt “Nord stream-2” from the requirements of the EU gas Directive. The Nord Stream AG and Nord Stream-2 AG consortia were waiting for a decision on the applications by the end of May, and the requests themselves were sent in January of this year.

“The final blow from the German authorities,” “Germany has finally abandoned the Nord stream-2” – such headlines were full of news feeds. “The gas pipeline could have been released from the Directive if it had been built by May 23, 2019, couldn’t it have been warned earlier?” there were comments of angry readers.

And only Gazprom remained coolly calm, reminding that there are too many “buts” in the adopted European law, which most often applies, for obvious geopolitical reasons, to Russia. And with such “but” is worth and need to fight.

Third energy package problem

The ambiguity of the Third energy package has been discussed many times.
With almost childish delight, the 2019 amendments to the Gas Directive were adopted by ardent opponents of Russian fuel. After all, now, in addition to the main requirements for the separation of the gas supplier to the transport company, access by third parties to the pipeline capacity, non-discriminatory tariffs and transparency, the document included mandatory control over the sea parts of pipelines coming to the EU from third countries.

“The scheme was so logical and calculating that it did not even require additional mathematical calculations from the inhabitants: the legislative act was exactly spelled out for “Nord stream-2.”
By the way, the European authorities would not be European if they did not like “energy tolerance.” But only to those they like.

Thus, The Azerbaijani Trans – Anatolian Pipeline (TANAP) perfectly fit the norms of the Third energy package, one branch of which goes from Azerbaijan via Turkey to Bulgaria, the other – through Greece to Italy, that is, to the territory of the EU. But it was not included in the” firing lists” of the energy package. They didn’t want to see the competition. Because Russian gas could enter the pipe on the territory of Turkey. And fuel from Russia, as you know, according to European standards is outside all systems and goes, not that from the “third party,” but as if straight from “Mordor,” spreading political pressure, monopolization of all possible areas and all that is usually attributed to it.

The project operator Nord Stream-2 AG has already stated that it does not agree with the decision of the German regulator. The company stressed that by May 23, 2019, the pipeline was completed “in terms of economic functionality,” and therefore, it does not fall under the Directive in any way.

Moreover, according to international legal experts, narrowing the definition of “project completion” to a conclusion on the physical construction of a gas pipeline “would violate the protection of legitimate expectations and other fundamental rights in EU law.” The amendments go against the guarantees of the German Basic Law, and billions of euros were invested in the project itself even before the Directive was adopted. “Excellent care” for European investors, including, by the way, the Germans themselves. But there is nothing to learn.

Energy war: the sequel

Comments for three Lebanese source leading experts of the national energy security fund (NESF) Igor Yushkov noted that Gazprom would not give up without a fight. And such a struggle is already similar to the war for the triumph of common sense:

“The operator Nord Stream AG will appeal, I think, and seek to exclude the pipeline from the norms of the Third energy package. And in general, this would be a logical solution. According to the current regulation, 12 km from the German coast, where the EU de facto begins, suddenly there should be some competition and some alternative suppliers should enter the pipeline. But everyone understands that this cannot happen at the bottom of the sea. And at the moment, this is an attempt to use antitrust legislation in cases where competition can not arise in any way.”

“And in the European legislation itself, it is written that in such cases exceptions are granted from the third energy package. Because if the Third energy package is applied to “Nord stream-2,” investors will be hit: companies have invested in the construction of the gas pipeline, hoping to get 55 billion cubic meters. They will receive 27.5 billion rubles. In other words, investments are simply devalued,” the expert said.
But if Europe does come to its senses, the situation with “Nord stream-2” may partially repeat the story with the continuation of “Nord stream-1”- the Opal pipeline.

“Until recently, the Opal pipeline was also not allowed to be loaded. As a result, we decided that an auction will be held for this 50% of the capacity that the alternative supplier should receive. And if no one, except Gazprom, will participate in it, then they will allow pumping to Gazprom. And so it turned out. There is no place for someone else’s gas,” Yushkov said.

Otherwise, Gazprom will have to use the technique of Eastern combat: if it is impossible to defeat the enemy in a fair fight, study and adapt to it. But even here, Russia will not disregard the law by completing the documentation procedure:
So far, indeed, Gazprom will only be able to pump 50% of “Nord stream-2.” But even if the company fails to achieve exceptions to the rules of the Third energy package, it can adapt to it. For example, give the last section to an independent operator for management, or transfer the right to half of the gas ownership to customers. That is, according to the documents, half of Gazprom’s gas will go, and a half – other companies,” Yushkov concluded.

And this is only part of the options. But the question arises – why invent an unnecessary bicycle, which even no one can ride during the pandemic if energy exports are becoming a real problem for some states?
There is no answer, as well as logic in the Third energy package, written by naive dreamers who dreamed of competing in the sea—a romantic but inconvenient story.

So we will win

The majority, even of the European inhabitants it has long been clear: “Nord stream-2” is a purely economic project that brings only benefits and cheap fuel prices to European consumers.

The Baltic republics, absorbed in the fight against coronavirus, in fairness, somewhat reduced the intensity of claims to the Russian project. However, they cannot and do not want to acknowledge the fact that pipeline gas from Russia can play a beneficial role in Europe’s climate plan as well as the fact that the use of cheaper pipeline fuel can become a springboard to the transition to a “green economy,” which is so expected from them in the EU. But it’s better to get a ton of criticism and threats of fines every year, but support your older brother.

By the way, the United States is now experiencing not the best days of its strategy for the spread of LNG in Europe, and the coronacrisis was merciless here.

“The Baltic States, Poland, and Ukraine are trying to demonstrate political loyalty to the United States. It is even more urgent for the United States to raise prices in Europe. Why does Washington oppose “Nord stream -2?” Because it wants to create a shortage of cheap gas on the European market, then the supply of expensive LNG will be profitable. And at the moment, the price of American LNG does not pass. Moreover, there are shipments now, because the prices are too small, and it is simply not profitable to export LNG,” Yushkov drew attention.

There were hopes that the deficit will appear at the expense of Ukraine. But Kyiv signed a contract with Russia. There was a plan to stop “Nord stream-2,” but Gazprom was determined to complete the pipeline on its own, despite the further consequences of US sanctions. There was an idea to put political pressure, but because of the coronavirus, people have no money left.
And even Warsaw, a loyal friend of Washington, played its game:

“Warsaw would benefit from “Nord stream-2.” Poland is already benefiting from Nord stream 1. There is a unique scheme for companies to use. In other words, when gas comes to Germany via “Nord stream-1,” individual surpluses are formed. They are sold on the stock exchange. Poles buy up these surpluses and send them to customers in Germany, who were supposed to receive this fuel via the Yamal-Europe gas pipeline (coming from Russia – approx. Three Lebanese sources), and the poles the same amount of gas taken on the Eastern border with Belarus. And they save on the fact that in reality, they do not pump part of the gas through their territory, and in general, they do not spend energy. The more gas comes to Germany, the more operations Poland can conduct,” concluded Yushkov.

At the same time, Warsaw hypocritically continues to frighten with a complete rejection of Russian gas after 2021. It turns out that everyone has chosen their roles. But they signed up for different performances. And on the stage-a farce, and in the hall people demanding what is possible for the price of fuel. Did they pay money for tickets for nothing?

So, has the last blow been delivered to the “Nord stream-2?” The proposed option of withdrawing the project from the EU Gas Directive was probably the simplest. But not the last.