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Nord Stream 2: Good or bad for Europe?

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World Pipelines,


With Europe’s gas demand rising for the first time in four years in 2015, internal gas production on the decline and with fewer new gas sources being brought online in Europe, the search new sources of fuel is on.

An increasingly fuel-hungry Europe is concurrently growing increasingly weary of Russia’s monopoly on the gas markets. This is sparking debates regarding which solution should be taken with regards to gas supply.

Oilprice.com has reported that Gazprom’s CEO, Alexei Miller, does not seem concerned about the Polish UOKiK’s ruling, which concluded that the Gazprom-led consortium – that is developing the Nord Stream 2 pipeline – would create too large of a monopoly for Russia and inhibit competition in the European gas network.

Although Estonia, Latvia, the Czech Republic, Poland, Hungary, Romania and Slovakia have signed a letter to oppose the Nord Stream 2 project, many of the pipeline’s investors and benefactors are from Western European countries, making them more invested in the project’s success.

These north-central European countries worry that a second Nord Stream line would allow Gazprom to further monopolise the European gas market, as wella as isolating Ukraine for political means.

On the other hand, western Europe sees Nord Stream 2 as a strictly economic pipeline to limit transit fees. The region has not traditionally had a single sourced natural gas market. Therefore, it does not see a monopolistic threat from Gazprom.

A Slovakian view

According to Sputnik News: “Slovakia is concerned about the Nord Stream 2 gas pipeline project, since its implementation could deprive Bratislava of potential revenues from transiting gas.” The news agency reported that Slovakian Prime Minister Robert Fico expressed this view.

Arguably, implementation of the project could deprive Slovakia of an estimated US$900 million per year in gas transit revenue.

Fico reportedly stated to the local Pravda newspaper: "If Nord Stream 2 is created, I wonder how the current [Slovakia's gas transportation] capacity will be used." He also added that the Nord Stream 2 project was a key focus of discussions during recent negotiations.

A US perspective

At a recent news conference in Sweden, US Vice President, Joe Biden, has commented on the project, stating that Washington considers the Nord Stream 2 gas pipeline a “bad deal” for Europe.

Prior to the conference, Svenska Dagbladet claimed that the US was going into the conference with the intention of putting pressure on Sweden over its participation in the project.

According to Svenska Dagbladet’s report, the US sees Nord Stream 2 as a political tool that is designed to drive a wedge between European countries with different Russian gas supply needs.

In addition, it has been reported by RT that the pipeline is also a way of removing Ukraine from transit revenue for Russian gas.

In May, Russia’s Foreign Minister, Sergey Lavrov, accused the US of trying to thwart the project, deeming the US’s attempts to block Nord Stream 2 as entirely political. Lavrov counters the reported US view and states that Nord Stream 2 will both increase Europe's energy supplies and improve its energy security.

The Nord Stream 2 project

Nord Stream 2 is being developed as a consortium led by Gazprom (50%), with partnerships European entities E.ON (10%), OMV (10%), Shell (10%), Wintershall (10%) and ENGIE (10%).

The Nord Stream 2 project aims to deliver 55 billion m3 of Russian natural gas to the European Union each year. The pipeline is set to travel across the Baltic Sea to Germany, bypassing Ukraine and Slovakia.

The project plans to imitate the original Nord Stream pipeline plans for 86% of the route, before branching off.


Edited from various sources by Anna Nicklin

Sources: Oilprice.com, RT, Sputnik News

Read the article online at: https://www.worldpipelines.com/project-news/01092016/nord-stream-2-good-or-bad-for-europe/


 

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