The Russians defend Nord Stream 2 and criticize its potential competition, LNG from the USA. The message is at least two-way. They convince the West that it will lose financially on abandoning the dependence on gas from Russia and that LNG from the USA is not a threat to Gazprom, because Europeans are buying it under pressure. I invite you to another fairy tale about cheap gas from Russia – writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.
Politics or economics?
Only a few days ago I repulsed the Russian message that the threat of US sanctions against Nord Stream 2 resulted from the desire to sell expensive LNG in Europe, while the embassy moves it to a new level. It goes from the Russian journals to the American information sphere, which shows the right target group of this disinformation.
The Russian embassy in the US argues that by criticizing the contested Nord Stream 2 project, the Americans want to promote their own “uncompetitive” liquefied gas in Europe. The embassy publishes information on this subject on Facebook.
– By attacking Nord Stream 2, Washington imposes its uncompetitive liquefied gas on Europe. Geopolitics once again interferes in the most obvious way with the economy, undermining slogans about the diversification of supplies – convinces the Russian institution.
It reminds the policy of Ronald Raegan from the 80s of the twentieth century, who introduced sanctions against companies cooperating on the Russian project to build a gas pipeline to Germany. According to the embassy, the goal was the same, i.e. exerting influence on the European allies of the United States. – It seems that we have gone back in time by 35 years – he concludes. It argues that American sanctions against Russia will be abolished in the future due to their “total lack of meaning”.
This is a response to the arguments I used, inter alia, by explaining American resistance to Nord Stream 2. It results from a long-term policy of limiting Russian influence in Europe, which is beneficial for countries such as Poland. Sanctions against Nord Stream 2 would also be desirable for Poles, which was even signaled by the Prime Minister of the Republic of Poland, Mateusz Morawiecki.
The European Union’s dependence on gas supplies from Russia remains a problem, as the US administration points out.
Secretary of State Mike Pompeo commented on the differences in sanctions policy towards Russia between the US and the European Union. – The existing dependence of Europeans on Russian raw materials makes their ability to confront limited… we have a real chance to reduce their dependence on Russia through a number of options – delivery by the Caucasus other countries… we must continue our efforts against Nord Stream 2 so that it is not built. We can not allow the EU’s dependence on Russian raw materials even more than now – said a US official.
Thus, the message addressed to the Western recipient is to convince him that US activities supported by some European Union countries, such as Poland, are not economically rational and will damage the portfolios of Europeans, for which they may be particularly sensitive. The alternative is to be pragmatic economic cooperation with Russia. The Russian embassy completely bypasses the context of aggression in Ukraine, hybrid actions against NATO countries and the political, legal, economic and security threats posed by the Nord Stream 2 project.
It is an extrapolation to the Americans of the problems of Gazprom, rightly accused of being a political tool of the Kremlin, not an ordinary company counting on economic profit. This company is under the control of the Russian state treasury and carries out political tasks. US companies are private, and the US administration has a limited influence on them, mainly regulatory. You will not read this in the messages of the Russian embassy.
You will also not read about the fact that when Sberbank published data on the economic unprofitability of Nord Stream 2 and other Gazprom projects of this type, which serve only to distribute contracts to colleagues of Russian President Vladimir Putin, one of the authors of the document immediately lost his job. This is the economic calculation in the Kremlin. When numbers do not confirm the thesis, all the worse for numbers.
Soldiers for LNG?
For the needs of the Russian recipient, the local media promote the thesis that resistance to Nord Stream 2 will end up with more expensive gas in Europe, because the alternative is “unprofitable” LNG. To prove it, they use the results of PGNiG presented on May 24. The Polish company disclosed data from the first quarter of 2018.
They show that imports from the east have fallen from 84 to 78 percent of deliveries year-on-year. Imports increased by 19 percent, mainly due to LNG supplies to the LNG terminal in Świnoujście. The trade portal Neftegaz.ru indicates that PGNiG recorded a decline in EBITDA by 3 percent and net profits by 2 percent. The reason is, of course, the LNG cost.
– The rapid increase in LNG import is objectively unprofitable, because the supply of this raw material and its production is more expensive than the costs of gas network – the authors of the text convince the portal. – From an economic point of view, Russia has no competition in Poland because the supply of gas is reaching the shortest possible route. Nevertheless, the Polish authorities are committed to the US and buy expensive American LNG – you can read.
According to the authors of the text, the matter is political, because the Americans also send soldiers to Poland, which is to make “Poland be quiet.” Neftegaz.ru puts forward the thesis that the price for stationing US soldiers as part of NATO’s Eastern Flank initiative is to be LNG purchases at a high price. You can still find hungry bits about the fact that “Russia never starts a war, but wins each of them”.
The general substantive value of the text is low, but in this case probably directed to the recipient in Russia, who should be reassured that LNG from the USA is not a threat to Gazprom, and US allies “must” buy them at a non-market price. The fact is, however, that the Poles managed to sign a long-term agreement on American LNG indexed to prices on European stock exchanges. This may be the beginning of the price revolution in Central and Eastern Europe, which Neftegaz.ru does not write about, of course. It continues to rant against the US.
– Instead of complaining Americans for an unfavorable contract, PGNiG directed all its efforts against Gazprom, complaining about it before an arbitrage tribunal in Stockholm – we read in the portal. Time is not a problem for Russian propaganda leaders. The case before arbitration has been going on since 2015, and LNG deliveries from the USA have been arriving in Poland since 2017.
Nord Stream 2 will deepen the problem
Despite the weak argumentation, the message from Russia hits a fertile ground in Europe, which is arguing with the President of the United States, Donald Trump, among others for economic, climate and foreign policy towards Iran. Trump’s unilateral policy makes it easier for Russians to convince Europeans that they will lose the symmetrical politics of Brussels and Washington, and thus the sharing of the West. According to the thesis of the US secretary, the argument remains that the dependence on gas from Russia, which is already paralyzing Europe, can increase after the construction of Nord Stream 2.
This project should never be built. Polish Foreign Minister Jacek Czaputowicz stated during a visit to the US that Poland is against Nord Stream 2, because it gives Russia tools to continue the pursuit of aggressive and revisionist policy in Europe, the best example being the illegal annexation of Crimea. It was for her that the West introduced sanctions and perhaps it should be covered by the disputed draft gas pipeline from Russia to Germany.