Nord Stream 2 gas pipeline - Political and strategic issues. Study No. 62

The Nord Stream 2 gas pipeline project should link Russia to Germany via the Baltic Sea by 2020. It would double the capacity of the Nord Stream 1 pipeline, operational since 2012, to reach a total capacity of 110 billion cubic meters per year. Estimated at 9.5 billion euros, the project is financed by Nord Stream 2 AG, which is 50% owned by Gazprom, and by its European partners, the French Engie, the German Uniper and Wintershall, the Austrian OMV and the Anglo-Dutch Shell up to 10% each. The project sours division in Europe and faces strong opposition from the United States. Opponents of the project put forward political, commercial and environmental arguments in an attempt to have it cancelled. - They believe that the pipeline is undermining the EU policy of diversification of its gas supplies, already largely dominated by Russia (35% of market share), and preventing competition within the sector. - They deplore the impact of the project for Ukraine, already affected by the war in Donbass, and the Russian strategy of drying up the transit of Russian gas to the European Union (EU) via this country. The gas flowing through Ukraine went from 80% of the Russian transit to the EU in 2000, to 34% in the first quarter of 2018. The Nord Stream 2 gas pipeline would allow Russia to do without the road by Ukraine, whose economy depends on the gas rent. - Finally, the environmental impacts of such a heavy infrastructure project in a closed, shallow and already highly polluted sea mobilize civil society actors. The Russian company Gazprom puts forward commercial and legal arguments to justify the need to consolidate its access to the European market. - Gazprom faces pressure from two sources: on the one hand, the competition of liquefied natural gas (LNG) which is being carried out both internally by the Russian company Novatek which opened several LNG terminals in the EU, but also externally with the arrival of Qatari and American gas on the European LNG market; on the other hand, the Russian state uses Gazprom as a social security fund by imposing low prices for the Russian consumer and by requiring supplies to remote areas of the country. - Gazprom also asserts its compliance with European rules: less polluting than coal, gas contributes to European energy transition objectives. In addition, the Nord Stream 2 project is part of the diversification objectives of the supply routes - if not of supplier diversification. The EU member states bordering the Baltic Sea have antagonistic positions for reasons that the study explains. - Germany is in favor of the project that would make it the gateway for Russian gas into the EU (30% of Russian exports to the EU). - Poland, which opted for US and Qatari LNG, is opposed to it because it fears Russia would gain influence and Germany would become the regional gas hub. - The Baltic countries stand in solidarity with Ukraine and oppose the project which bypasses them deliberately. However, they remain cautious on the issue because of their dependence on Germany and Russia. - The Scandinavian countries have ambivalent positions, in particular because some local actors, influential in these traditionally decentralized countries, support the project. (authors)