The completion of the Nord Stream 2 gas pipeline, almost two years after the original deadline, does not conclude the dispute over the pipe. The US sanctions and the EU law make it impossible to quickly start gas transmission, despite the fait accompli policy pursued by Gazprom, which is contributing to the high gas prices in Europe – writes Wojciech Jakóbik, editor in chief at BiznesAlert.pl.
According to the EA Daily news agency, early Monday morning on the 6th of September, the construction of Nord Stream 2 has been completed, and the line that was still underway is now waiting for the so-called “golden weld”, which will connect the completed sections in the waters of the German Exclusive Economic Zone. Gazprom had previously announced it wanted to start transmitting 5-6 bcm of gas via the new pipe already this fall, but that the US sanctions and the need to implement the EU anti-trust regulations from the third energy package were in the way.
Technical certification and insurance that both require cooperating with companies under the threat of the existing US sanctions are also a concern. Americans have completed the sanctions list by adding a company called Constanta, as it could potentially be used to insure Nord Stream 2 and to avoid restrictions. It may turn out that Washington will have the final say on when Nord Stream 2 will get insurance, and, consequently, when the deliveries will become technically possible. It is unclear how long this process will take, but one could imagine a situation where the first line that had been completed back in June 2021, will be flaunted as the potential source of the mentioned 5-6 bcm on offer for Europe this fall.
Russians will continue to argue in court and on the public forum that their pipeline is technically finished, because a financing model had been set up and money had been spent, so there is ground to start deliveries. However, before this can happen Gazprom will need to face many hurdles. Let’s start with the fact that the company has recently lost at the court in Düsseldorf, which decided the pipe could not receive derogation from the EU gas directive regulations. Additionally, PGNiG, together with other entities, may join the certification process and demand that all of the regulations included in the EU gas directive be implemented. This will entail an expensive and time consuming regulatory certification in line with strict standards that will leave little room for Gazprom to maneuver. The discussion on allowing a third party – Russia’s Rosneft is already underway in Moscow, and may turn out to be much more than an attempt by Gazprom’s rival to break the Russian monopoly. In the most extreme case, Russians would have to change their own law to adapt Nord Stream 2 to EU regulations, which would deprive Gazprom of its exclusive access to export gas pipelines. Such a move would require earlier talks with the European Commission, and perhaps even an intergovernmental agreement between Germany and Russia, which would take time.
It’s been an open secret that the opponents of Nord Stream 2 are concerned about the fait accompli policy, and about the deliveries starting in spite of the sanctions, which has been suggested in the recent comments made by pro-Russian analysts in Western Europe after the loss at the Düsseldorf court. We wrote about the case earlier on BiznesAlert.pl. It is absolutely necessary that Poles and other opponents of Nord Stream 2 continue to participate in the certification of the pipe’s operator, as it will stabilize the situation in view of the rising prices for which Gazprom is also partially to blame, as it has put a break on supplies to Europe despite shortages, and started to deplete its gas storage facilities on the continent. The discussions on Nord Stream 2 will run simultaneously with the negotiations on the deal proposed by the US and Germany, with the provision that their possible failure may result in implementing the suspended US sanctions on the operator Nord Stream 2 AG, which could make it impossible to start the deliveries.
To sum up, the end of the Nord Stream 2 construction is just the beginning of a new stage of the dispute over the pipe, which has been drawing a wedge in Europe since the idea emerged in 2015. The construction of Vladimir Putin’s pipe was delayed by almost two years thanks to US sanctions and the EU law, which could guard Europe’s energy security against Gazprom’s abuses. Russian officials have already announced Nord Stream 2 would start transmitting gas at the end of 2021, despite the attempts at pursuing the fait accopli policy already this fall. It is possible that this deadline will not stand either, especially if the American sanctions thwart the attempts at technical certification, or if the regulatory certification takes longer. By presenting foreign policy and security policy arguments Poland and Ukraine could expand the format and prolong the discussions on Nord Stream 2, and throw another wrench in the process.