Compromise advances Nord Stream 2, but controversy remains

Nord Stream 2, the controversial gas pipeline between Russia and Germany, advanced a step in Europe during February—but only a step.

Members of the European Union approved a compromise between France and Germany aimed at easing concerns about Russian domination of Europe’s gas market.

They tentatively approved extension to non-EU pipelines of European regulation of electricity and gas markets.

The move would make Gazprom unbundle Nord Stream 2 gas supply and transportation.

Support comes from countries fiercely opposed to Nord Stream 2, such as Poland, and from others wanting Europe to retain influence over the project.

Poland worries about weakening of the geographic buffer to its east. Ukraine will lose economically crucial transit business if Russia commissions Nord Stream 2 and the TurkStream pipeline across the Black Sea.

But Germany supports the project. It needs Russian gas as it phases out coal and nuclear energy in power generation. And former Chancellor Gerhard Schroder is a top Gazprom official.

Worry grew in Berlin when the French government indicated support for increased EU oversight of Nord Stream 2.

The new compromise links approval of that step with designation of Germany as lead project negotiator with Russia. According to news reports, only Bulgaria objected.

Acceptance of any path forward for Nord Stream 2 probably reflects European impatience with intense pressure from the US against the pipeline.

Washington says Russia might use new European dependence on its gas as a political weapon. Berlin says the US just wants to squelch competition for American LNG.

Moscow seems irked.

Projects like Nord Stream 2, said presidential press secretary Dmitry Peskov in a statement distributed by Tass, “do not increase anyone’s dependence; instead, they create interdependency.”

Foreign Ministry spokeswoman Maria Zakharova said passage of the gas measure would hurt Nord Stream 2 financing.

She also said the European Commission’s legal service has called the changes inconsistent with United Nations maritime conventions.

The compromise awaits approval by the European Parliament. Apparently, it has not ended the controversy.

(From the subscription area of www.ogj.com, posted Feb. 28, 2019. To comment, join the Commentary channel at www.ogj.com/oilandgascommunity.)