Jan 1, 2022
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Nord Stream 2022: Putin is waiting for how long Europe will still freeze

Nord Stream 2022: Putin is waiting for how long Europe will still freeze

Photo: DPA / TASS.

The year 2021 ended for the Russian Nord Stream 2 gas pipeline with mixed results. On the one hand, the project was nevertheless implemented by the forces of Russian courts after European contractors had previously withdrawn from it, fearing US sanctions.

On the other hand, the certification process of the gas pipeline, which was supposed to be completed in the coming January, according to the latest statements of the German Federal Network Agency, could drag on for another six months until the summer of 2022. Even then, the launch is not guaranteed, because the ill-wishers of Nord Stream 2, in particular Washington, continue to demand its complete stop and threaten with sanctions. True, the good news is that restrictions against the gas pipeline were not included in the US defense budget adopted in December.

As stated on December 28 by the Permanent Representative of the Russian Federation to the European Union Vladimir Chizhov, for Russia, the timing of certification is not of fundamental importance, it already supplies gas to Europe. Only European consumers suffer from this, who “will have to pay more for Russian gas and wait for further developments.” He also expressed confidence that the issue of delaying certification is not a technical one, as the EU claims, but a political one.

European consumers do have to pay a lot against the backdrop of gas shortages. In December, the physical flow of gas through the Yamal-Europe gas pipeline to Germany was suspended and the section began to operate in reverse mode. After that, the price of gas in Europe for the first time in history exceeded $ 2,150 per thousand cubic meters. Some European countries, in particular Poland, blamed Russia for this, but, as noted in Gazprom, the Europeans themselves do not order additional volumes of gas, possibly hoping that prices will go down.

Although the President of Russia Vladimir Putin said that the start of supplies via the Nord Stream 2 gas pipeline would lead to a decrease in spot prices for gas, while the Europeans are not going to speed up the certification process. German Foreign Minister Annalena Berbock On December 28, she said it was more than “just a private economic project,” as the country’s chancellor called it. Olaf Scholz. She also recalled the agreement between Germany and the United States on “Nord Stream-2”, which states that “energy resources cannot be used as a weapon.”

The certification process for Nord Stream 2 has now been suspended, as the operator Nord Stream 2 AG, headquartered in Switzerland, needs to register a subsidiary in Germany.

Igor Yushkov, leading analyst of the National Energy Security Fund, expert of the Financial University under the Government of the Russian Federation believes that this process will be completed in the summer and then the gas pipeline can be launched, however, it can work only at 50% of the load.

– The intrigue of the past was whether or not Nord Stream 2 will be completed, and the intrigue of the next – whether or not it will be launched. If nothing extraordinary happens, then it will definitely not be launched during the heating season. History shifts to the middle of the year. The counting is simple. It is assumed that if Gazprom finishes re-registering the Nord Stream AEG 2 company from the Swiss jurisdiction to the German one in early 2022, it will be able to submit documents to the German regulator for certification again.

The regulator has the right to consider an application for up to four months, then sends its decision to the European Commission, which considers it up to two months, after which it communicates its opinion. The regulator may or may not take it into account, after which it makes a final verdict.

On the one hand, it is not a fact that they will need a maximum period of four or two months; after all, they have already done part of the work. On the other hand, it is important for the German regulator to do everything so that the mosquito does not undermine the nose, so he will not rush to make a decision. The main thing is that he is not accused of not playing up to Gazprom or Russia.

If in the end the German regulator nevertheless makes a decision in favor of Gazprom and makes Nord Stream AEG 2 the operator, Poland will in any case challenge this decision. She will sue and seek to have this decision overturned. Therefore, it is so important to do everything competently from a legal point of view in order to defend your positions in court.

“SP”: – What will be the results of this long certification?

– Probably, Nord Stream AEG 2 can be made an operator company. The current wording with which the Germans suspended certification hinted at a positive outcome for Gazprom. If the regulator still refuses Nord Stream AEG 2, Gazprom may well find an independent operator on the market and hire him to perform certain services.

The problem is that Gazprom is now trying to get it to be allowed 100% loading of the pipeline by one supplier. So far he has not succeeded. Most likely, in 2022 we will see the launch of Nord Stream 2, but it will only operate at half its capacity.

A more radical scenario is if frosts begin in Europe in February-March, underground storage facilities will be emptied, a critical shortage of gas will begin and there will be a risk that consumers will begin to freeze. In this case, the Europeans can offer to “try” whether the gas pipeline is technically ready and to run it in different modes, receiving gas along this route. But this is an unlikely option.

If force majeure does not happen, Germany is unlikely to dare to launch Nord Stream 2 ahead of schedule. They will try to thoroughly implement their own laws, so that later they will have less legal proceedings and so that the claims of the opponents of the project are less substantiated.

Director of the Energy Development Fund Sergey Pikin also believes that it is not necessary to count on the launch of the project before summer, but indicates that there is an option in which it will be loaded at full capacity. Unless, of course, politics gets mixed up again.

– If the prices of $ 2,000 per thousand cubic meters on the spot market did not frighten the Europeans, this is unlikely to change in the coming months. Moreover, this is the cost of futures, and in fact, many consumers receive gas under long-term contracts with Gazprom several times cheaper than on the stock exchange.

Most likely, the certification of Nord Stream 2 will take place no earlier than mid-summer, as they say now in the Federal Grid Agency of Germany. By this time, the European storage facilities will need to be filled already next winter, so the gas pipeline will be able to start its work.

“SP”: – But will it work 100%?

– The situation is good because the German regulator will certify Nord Stream AEG 2 as an independent gas operator. And the gas operator can potentially use the pipeline 100%. This is a new situation, but if a company is certified in this status, it will be able to operate without restrictions.

Of course, intrigues and political intrigues may begin that will affect the fate of the gas pipeline. But if we do not make serious mistakes in international politics, then there should be no serious sanctions against Nord Stream 2.

With the current set of factors, I do not see any legal or other obstacles that will prevent the certification and launch of the gas pipeline in the summer. Now there are purely bureaucratic obstacles that can be overcome. Though life is often full of surprises, everything can be expected.

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