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Nord Stream 2 Pipeline Deal Struck

Thursday, March 14, 2019

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Last month, Germany and France reached an amended agreement regarding the Nord Stream 2 pipeline, which will carry natural gas from Russia to Germany. The endeavor is reportedly still on schedule.

According to The Guardian, Nord Stream 2 has been in the works for eight years; 434 miles of pipe—out of a total of 746—has been laid so far.

Project History

The construction for Russian gas giant Gazprom’s pipeline began in the Bay of Greifswald, located on Germany's Baltic Sea coast in May 2018. Nord Stream 2 will allow Moscow to route gas exports around Ukraine.

Since the establishment of Nord Stream 1 in 2011, the transit of Russian gas through Ukraine has declined. German chancellor Angela Merkel has also highlighted the fact that Germany’s support for the pipeline is now in question, as the project cannot go forward unless there were guarantees for Ukraine in terms of overland gas transit.

Gazprom is willing to maintain transit of gas through the Ukraine, but at lower volumes; the country rejected this offer.

According to Bloomberg, the U.S. has long opposed the pipeline, given the needs of Ukraine and the energy interdependence of Europe. A U.S. official also pointed out concerns that the pipeline would allow Russia to install monitoring technology in the Baltic Sea. (Though, Bloomberg notes, this is unlikely due to the fact Nord Stream 2 will run parallel to its predecessor; Nord Stream 1 could be used for the same purpose.)

In January, construction progress was reported, with the first line slated to be ready by November, and the second line slated to be ready for operation by December.

According to DW Business, Nord Stream 2, which is composed of two welded conduits, each with an inside diameter of 1.2 meters (4 feet), will move gas from northwestern Siberia 1,230 kilometers (764 miles) across the Baltic seabed through Swedish, Finnish and Danish waters, to northeastern Germany.

Compromise Deal                           

A deal signed earlier in February mandates that the pipeline must meet four EU rules, which includes a stipulation that other supplies be allowed to access the pipeline. Germany will have the final say in how these rules are applied, however. The final text of the agreement, which has yet to be approved by governments involved as well as the EU parliament, has not been published.

Even though Denmark has yet to issue permits, the project can avoid the country’s territorial waters. A consortium spokesperson noted that the company would refrain from speculating on the compromise deal, since it is still pending final approval.

Experts have also specified that with the new regulations for the pipeline project, Nord Stream 2 would be utilized less in the first few years of operation, which will cut back on the impact on the Ukraine. As part of a longer term plan, the pipeline will give Gazprom enough excess capacity to account for an uptick in Russian gas supplies.

"We would like to say that we will be implementing this compromise directly, and do not see any need for a further mandate," said parliamentary state secretary at the federal energy ministry Thomas Bareiss.

If the deal, with changes including Nord Stream 2 likely having to submit to regulated tariffs for the section that runs through the EU, is approved, Germany will have to start regulating the EU section of the pipeline by spring of 2020.

Once the project is online, the project will be allowed to run gas without changing its operation rules until the new regulation is enforced.

   

Tagged categories: EU; Europe; Government; Infrastructure; Pipelines; Program/Project Management

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