Nord Stream 2 is being ‘dead’ because of the Russia-Ukraine conflict

Even before hostilities broke out, the 1,234-kilometer offshore gas pipeline project, designed to double the flow of gas from Russia to Germany, faced major hurdles. Right now, it looks like it’s been “dead”, one analyst said.

“The Last Nail In The Coffin”

The Nord Stream 2 project started in 2018, but has become the focus of controversy in Europe and the US before being completed in September 2021. By November 2021, there were new obstacles when Germany’s energy regulator temporarily halted the process of licensing the pipeline. The move comes after Russia deployed tens of thousands of troops and military hardware along Ukraine’s border.

Nord Stream 2’s “last nail in the coffin” appeared in February 2022 when Russia officially recognized the independence of two breakaway regions in eastern Ukraine. That prompted the government of German Chancellor Olaf Scholz to suspend the certification process altogether.

The ensuing Russian-Ukrainian conflict plunged Europe into a geopolitical crisis not seen in many years and prompted joint projects such as Nord Stream 2 and business partnerships between Russia and Russia. Europe stands on the brink.

Kristine Berzina, senior fellow at the German Marshall Fund in the US, said: “Russia’s attack on Ukraine has put an end to Nord Stream 2. It is difficult to imagine Germany or any other European country. will turn around and license the project after the Russian action. Even other pipelines in operation face a bleak future. Nord Stream 2 is frozen in a dormant state. Other than ensuring the safety and stability of this structure I see no prospect of operating it.”

After Russia launched a special military campaign in Ukraine, the EU announced that it would “separate” from Russian energy with a decision to cut gas imports from this country by two-thirds by the end of 2022 and move towards ending it. Russia’s dependence on fossil fuels by 2030. In response, Russia warned to stop exporting gas to “unfriendly” countries if payments were not made in rubles. However, the G7 group rejected this request.

Amid escalating geopolitical tensions, there is growing skepticism about the future of Nord Stream 2. Kateryna Filippenko, European gas researcher at Wood Mackenzie said: “We do not believe Nord Stream 2 will be operational. Europe’s attitude to Russian gas is now very difficult to reverse and they are determined to diversify their supply. Meanwhile, Russia warned to stop supplying gas to Europe. It is difficult to see a prospect of cooperation between the two sides that helps to give the green light to the project.”

The battle will decide everything

The owner of Nord Stream 2 is Nord Stream 2 AG – a subsidiary of Russian gas giant Gazprom, headquartered in Switzerland. However, the project is also co-financed by a number of other European companies such as the German oil company Wintershall Dea, the Austrian multinational oil, gas and petrochemicals OMV, the multinational power company Engie country of France and a British multinational oil and gas company Shell plc.

In the context of Western businesses massively withdrawing from Russia due to the impact of sanctions, energy companies involved in Nord Stream 2 were forced to accept huge losses because of this project. At the beginning of March 2022, Wintershall Dea announced that it would eliminate its 1 billion euro ($1.1 billion) funding for the pipeline. OMV also made a similar move and Shell withdrew from the project. Nord Stream 2 AG is considering filing for bankruptcy in the coming days.

Mr. Warren Patterson, head of commodity research at ING banking and financial services group (Netherlands), said that “the project seems to be drowning in water” and its future is always in doubt. limbo state. “The EU’s plan to get rid of dependence on Russian gas by 2030 shows that natural gas is unlikely to flow through this pipeline.”

This expert assessed, Nord Stream 2 AG may need to wait and see if there are any prospects for the project after the war ends. “Otherwise they will have to make the decision to give it up or revoke it. Either way, it’s a costly decision.”

The fate of Nordic Stream 2 will largely depend on how the Russo-Ukrainian war ends. There are many factors to consider, such as whether President Putin will achieve his goals, whether the parties will reach a truce or whether the conflict will continue to escalate.

Many people fear that this will be a costly war that neither side will win. Meanwhile, negotiations between the two sides to find a ceasefire and peace agreement remain difficult.

There is still a chance to revive

Some analysts note, there are still slim hopes for turning the fate of Nord Stream 2. Henning Gloystein, director of energy, climate and resources at Eurasia Group said: “This project may not be licensed or operated if the Ukraine war does not come to an end“.

This expert emphasized: “The only scenario for a resurgence is for the Russian government to reform or change its mind. But even then, I still think that Germany will not be willing to accept this project in its previous form. Berlin could find a way to turn it into a hydrogen pipeline. But this seems a bit far-fetched at the moment“.

There has been speculation for years that the Nord Stream 2 gas pipeline and other pipeline routes could be used to transport hydrogen, said Kristine Berzina, an expert at the Marshall Fund of America. in the future and Russia will be a potential supplier of this energy.

“It remains to be seen whether politicians in Germany want to restore relations with Russia with next-generation decarbonized energy? But will Europe accept dependence on Russia again? Because that will certainly enrich Russia.” expert Kristine Berzina, notes.