Germany Remains Committed to Russian Pipeline Project Despite US and EU Warnings, Countermeasures

By James Carstensen | June 5, 2019 | 7:23 PM EDT

German Chancellor Angela Merkel and Secretary of State Mike Pompeo in Berlin on Ma7 31, 2019. (Photo by Sean Gallup/Getty Images)

Berlin (CNSNews.com) – German Chancellor Angela Merkel remains committed to the controversial Nord Stream 2 gas pipeline between Germany and Russia, despite fresh U.S. warnings, threats of possible U.S. sanctions, and an amended E.U. directive challenging sole Russian control over part of the pipeline.

Merkel told a Federation of German Industries (BDI) conference on Tuesday the project would go ahead, and that a switch from other energy sources to natural gas is the only way forward for Germany’s energy policy.

“If we stop using nuclear and coal energy, we have to switch to using gas as a source of energy,” she said. “This is why I have always said that the Nord Stream 2 pipeline should be built.”

Merkel added that her only concern remains ensuring that gas supplies still transit through Ukraine – a longstanding sensitive issue in Russian gas supplies to Europe.

“I have always advocated the construction of the Nord Stream 2 gas pipeline in addition to transit through Ukraine,” she said.

The Nord Stream 2 project will transport 55 billion cubic meters of gas from Russia to Germany annually under the Baltic Sea, doubling supply from an existing pipeline, Nord Stream 1. Critics see it as an attempt by Moscow to expand its energy leverage over Europe.

On Monday, Russia’s Interfax news agency cited the state-owned gas giant Gazprom as reporting that the new project is currently 57 percent completed.

The European Union’s executive Commission and Ukraine have both expressed concern that once Nord Stream 2 is online Russia may cut off existing gas supplies transiting Ukraine. Russia has serious differences with the Ukraine government, and severing the supply could be a means of applying political pressure on Kiev, something it has done in past years.

President Trump last year criticized Germany’s commitment to the project, claiming it risked becoming “a captive of Russia.”

The project owner and sole shareholder is Gazprom, with financial backing from Austria’s OMV, the Anglo-Dutch oil company Shell, France’s Engie, and Germany’s Uniper and Wintershall.

Last month U.S. senators introduced a bipartisan bill that would enable sanctions on individuals and entities – such as European ships – involved in Nord Stream 2. Targeted individuals and entities would be barred from the U.S. financial system or from owning U.S. land or property.

Merkel’s expression of ongoing support for the project came shortly after Secretary of State Mike Pompeo during a five-day European trip reiterated U.S. opposition.

“We in America simply hope that Europe will take seriously the need for a diversified, secure energy base, an energy base that isn’t tied to Russia,” he said while in the Netherlands on Monday.

“We know the history between Europe and Russia, and we know that in times of conflict the Russians will use whatever tools they have available to raise the costs for Europe to make decisions that are in its best interests, but perhaps not in the interests of Russia,” Pompeo told RTL Netherlands. “We hope Europe will get this right.”

Pompeo was asked, while both in the Netherlands and Germany, whether the envisaged sanctions would affect Dutch or German companies. He replied only that he never discusses sanctions before they are rolled out.

The European Commission, which has criticized Nord Stream 2 for not meeting European goals of diversifying gas supplies, recently amended a directive that extends the bloc’s gas liberalization rules to cover offshore gas pipelines from non-E.U. countries.

These new rules, effective from May 24, apply only to a 54 km section of the 1,200 km pipeline, in German territorial waters. Under them, Gazprom will be prohibited from being sole owner and shipper of the gas, requiring that other companies also gain access to that section of the pipeline.

Gazprom called the move discriminatory and threatened legal action, but has not yet taken any formal steps.

Kim Talus, director at the Tulane Center for Energy Law in New Orleans – who has published studies on the subject – said that for its part, the E.U.’s approach is also subject to criticism, as it may violate the standard for fair and equitable treatment.

“In essence, some of the Commission actions have been very questionable and against established rules in the E.U., and arguably against rule of law in the E.U.,” he said.

Talus added that the E.U. Commission’s scramble to propose the new directive amendment to cover Nord Stream 2, after failure in relying on various other claims, may be discriminatory as it effectively targets one company only.

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