The US has recently expanded sanctions against a Russian entity and a vessel associated with the project . Is this just symbolic now – or could the US yet derail the project ’ s commercial operation ?
The recent sanctions will have no material impact because construction has already been completed and technical certificates have been obtained . The draft NDAA 2022 [ National Defense Authorization Act ] which envisages sanctions in respect of operation of the pipeline are more concerning but not insurmountable either .
You link an eventual certification of Nord Stream 2 to a deal in which Russia continues to send gas via Ukraine beyond 2024 . Do you suspect the technicalities surrounding the pipeline ’ s compliance with EU competition law are being used to mask political demands ?
The German government political position has always been that NS2 could not proceed unless Ukraine continues to play a transit role , so this political demand has always been explicit . This political demand was met when Gazprom agreed to a deal ensuring transit revenue to the end of 2024 ”. Ukraine transit deal ensuring transit ( revenue ) until the end of 2024 . But the German government has never mentioned a time frame for how long Ukraine transit would have to continue and it is conceivable that it might try to press for post-2024 transit in exchange for certification . Of course , there is a danger that Russia might perceive it as moving the goalposts .
Russian gas flows to Europe improved in November but remained low compared to recent years . Do you think Russia has been withholding supply during the global gas crunch to strengthen its hand ?
I don ’ t think it has been withholding supplies . I think initially it did not have enough gas available to feed both domestic and European storage and decided to fill its domestic storage first . Now , as the domestic storage [ facilities ] have been filled , it may have spare gas to flow to Europe – and the flows have improved somewhat albeit not significantly – but all existing contracts are being met . I think one of the constraints why Gazprom is not offering additional gas to the market on top of its existing contracts might be that it does not want to enter into contractual supply commitments as long as it is not sure it will have sufficient reliable export capacity to deliver on those additional commitments going forward .
You noted a peculiar reason the BNA provided for suspending its certification process . Many have wondered why it accepted the application of a Swiss-registered company in the first place instead of demanding a German-registered one . What does this delay tell us ?
The BNA may have accepted the application from the Swissregistered NS2 AG in the hope that NS2 AG would re-register as a German subsidiary during the certification process to operate the entire NS2 pipeline . But the BNA only has the power to request the establishment of a German subsidiary in respect of the German section of the pipeline and NS2 AG only agreed to set up a German subsidiary to operate the German section . By accepting the application , the BNA gave itself an option to suspend certification at any time of its convenience . It may have chosen to exercise this option now “ to wait out ” a period of political transition , domestically and internationally . In any event , suspension does not prevent it from allowing flows if the supply crunch situation becomes dire .
Is all this fuss ultimately a reflection of Germany caught between a rock and a hard place – antagonise its main energy supplier or antagonise the US ?
Germany is clearly caught between a rock and a hard place , but as it wants and needs this pipeline , certification will be completed and the gas will flow eventually , but it will have to navigate this process very carefully . n
Montel Magazine 4 – 2021