Germany decided to join the talks on maintaining gas supplies through Ukraine despite the construction of the Nord Stream 2 gas pipeline. Its construction seems to be decided, and its opponents are fighting today to regulate the project so it harms Central and Eastern Europe as little as possible. The situation could only be changed by an unpredictable factor, like sudden US intervention, writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.
Germany is entering the game
Although the Kremlin informs that one of the topics of the next telephone conversation of President Vladimir Putin with German Chancellor Angela Merkel was the contested Nord Stream 2 project, the main issue was the chemical attack in Syria, for which Russia is accused.
According to the press office of the Chancellery of the President of the Russian Federation, both sides stressed the need for an objective investigation into the chemical attack in Douma. The Kremlin mentions that another topic of the conversation was the Nord Stream 2 project, a gas pipeline from Russia to Germany across the Baltic Sea, which among others Ukraine is afraid of. Ukraine depends on the revenues from the transmission of the Russian raw material through its territory.
Merkel declared in April that Nord Stream 2 has a “political dimension” and will not be able to form until the future of gas supplies from Russia via Ukraine is resolved. Berlin requires Moscow to guarantee a minimum level of supply through its territory. Gazprom reported that it could amount to around 10-15 billion cubic meters annually.
However, according to my information, at least 60 billion cubic meters per year are needed, if Ukraine is to avoid costly reconstruction of the gas transmission system in order to reduce supplies. An important factor may be supplies from the European Union for the needs of the Ukrainian market or for the use of local gas warehouses by western companies.
Less and less time
The European Commission has proposed talks about the minimum level of supply and praised Germany for its constructive attitude. They are to take place in an innovative format, in which, apart from the European Commission, Ukraine and Russia, Germany is also to be found. It is difficult to justify such a solution. In the past, the Commission has represented the Union in such talks, for example tripartite negotiations on the temporary conditions of gas supplies from Russia to Ukraine, which helped to avoid the gas crisis in the winter of 2014. Germany, officially recognizing Nord Stream 2 as a commercial venture independent of politics, will therefore represent two German companies that are financial partners of the project: BASF / Wintershall and E.on / Uniper. This weakens the legitimacy of the European Commission as a representative of European interests. It is also worth remembering that Germany and Russia could still agree to maintain a minimum level of supply in 2016, and therefore there is a risk that they will conduct talks in a jointly determined direction.
However, the talks themselves give hope for finding a temporary solution. It is not known how to understand Merkel’s declaration that the project will not be able to be implemented without resolving the future of transit. Does this mean that after obtaining a set of approvals in Germany, the construction of Nord Stream 2 in this section, and therefore in the territory of the European Union, will be able to start only after the discussions about the level of transit? It would give hope for delaying the project at least until then.
In Brussels, you can hear unofficially that the company responsible for the project and one hundred percent Russian Gazprom would like to obtain a full set of approvals by the end of April and then also start construction work. Also for this reason, according to BiznesAlert.pl, the antimonopoly investigation is coming to an end, the fruits of which are questioned by Poland and other critics. The leak published by our portal shows that the Commission managed to establish a number of pathologies in Gazprom’s proceedings with gas blackmail against EU countries. Nevertheless, it expects modest remedies that criticize energy sector experts.
After the commencement of the construction of the gas pipeline on the territory of the European Union, the supporters of the amended gas directive will be more difficult to expect that the commenced investment will be subordinated to the new law. Even if it is possible to avoid the creation of a legal gate for the project that BiznesAlert.pl warned of, then it may turn out that antitrust regulations that may delay the project and limit its negative impact on the Central and Eastern European market will not be able to cover it.
Surprise from the USA?
Therefore, the EC-Ukraine-Russia-Germany negotiations should be closely watched. If Berlin wants to save European integration, it should allow the European Commission to secure a minimum transit through Ukraine and not allow the start of construction of Nord Stream 2 until the end of talks. It is not known how long they will last. Perhaps this is the last moment to revise the Gas Directive to include Nord Stream 2. There is less and less time. Opponents of the disputed gas pipeline look for hope overseas. Although the US president has the option of sanctioning partners on Russian projects, such as Nord Stream 2, their potential effectiveness is questioned, and the US leader does not want to take advantage of them. So far, he has sanctioned the president of Gazprom, Alexei Miller, to which he responded with a declaration that he is proud of them, and the fact that he has not been included in them has caused him to fear that “something is wrong with him.”