“In the light of recent developments, we need to reconsider the situation with regard to Nord Stream 2 as well.
The 750-mile pipeline was completed in September, but has not yet received final certification from German regulators. Without it, natural gas would not be able to travel from Russia to Germany via the Baltic Sea pipeline.
The United States, the United Kingdom, Ukraine and several EU countries have opposed the pipeline since it was announced in 2015, warning that the plan would increase Moscow’s influence in Europe.
Nord Stream 2 can supply 55 billion cubic meters of gas per year. This is more than 50% of Germany’s annual consumption and could be worth $ 15 billion to Gazprom, the Russian state – owned company that controls the pipeline.
As Russia’s largest gas consumer, Germany sought to exclude North Stream 2 from world politics. But defending Berlin’s plan was difficult, as its allies discussed how to punish Moscow for ordering an invasion of Ukraine.
Russian President Vladimir Putin’s decision to send troops into eastern Ukraine has put the German government in a difficult position. U.S. officials have made it clear that they will suspend North Stream 2 without giving details of how it will be carried out in the event of a Russian invasion.
Gas prices are soaring. What happens next?
Energy is a major political issue in Central and Eastern Europe, where gas supply from Russia plays a key role in generating electricity and heating homes. Natural gas prices have set new records in Europe this winter, and a collision in Ukraine could bring more pain to consumers.
On Tuesday, the main price of natural gas to be distributed in Europe next month rose to about 79 ($ 89.54) per megawatt hour, from € 71.50 ($ 81.04) at the end of Monday, according to data from the Independent Goods Intelligence Service.
Prices have fallen to an all-time low just before Christmas. However, they are significantly higher than they were a year ago, with gas trading at € 16.30 ($ 18.47) per megawatt hour.
Analysts say the fight over North Stream 2 should not dramatically change the price outlook for this winter. The pipeline is not expected to come online until the second half of the year, said Tom Marseck-Manser, head of gas analysis at ICIS.
Still, Dmitry Medvedev, deputy chairman of Russia’s Security Council, warned after Germany’s announcement that prices would skyrocket in Europe.
“We welcome the bold new world in which Europeans will soon pay € 2,000 for 1,000 cubic meters of natural gas,” he tweeted.
Marzec-Manser said this would equate to approximately € 215 ($ 243.75) per megawatt hour, which is approximately 20% higher than the record level reached in December.
According to Henning Clostein, director of energy, climate and resources at the Eurasia Group, Europe is in a better position than it was a few months ago, with increased imports of liquefied natural gas or LNG in early January and early February. The weather is also relatively mild.
Lots of rides on what’s still going on.
LNG, which comes from the United States and Qatar, Ukraine, which accounts for about 10% of total supplies to the EU, will be able to withstand any disruption to the gas flow if the pipes are damaged during the war.
But if Moscow, which has already reduced its gas exports to Europe, decides to suspend them further in response to Western sanctions, it could dramatically escalate the situation.
“If Russia stops sending gas to Europe, there will not be enough LNG to deal with it,” Klostein said.
He said Russia was not expected to take such drastic action because it would hurt Gasprom, but said it was a possibility for Putin’s recent aggression.
– Lindsay Isaac contributed to this story.
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