Updated Feb. 23 to include US sanctions.
Germany stopped the certification process for the controversial 55-billion cu m/year Nord Stream 2 natural gas pipeline Feb. 22 following building tensions and advances by Russian troops into eastern Ukraine.
Nord Stream 2 completed work on the 750-mile pipeline and first-string gas fill in 2021, but was awaiting certification to begin operations (OGJ Online, Oct 18, 2021; Nov. 22, 2021). The two-string pipeline is expected to deliver Russian gas to Germany 1,200 km along the Baltic Sea bed from Ust-Luga, Russia, to Greifswald, Germany.
"With regard to the latest developments, we need to reassess the situation also with regard to Nord Stream 2. It sounds very technocratic but it is the necessary administrative step in order to stop certification of the pipeline," German Chancellor Olaf Scholz said in Berlin, media reported.
Not yet in operation, the pipeline has been controversial as Germany and Europe become increasingly dependent on natural gas from Russia. The region is already struggling with high natural gas prices.
“While Nord Stream continues to flow and function at full capacity, this decision was specific to the Nord Stream 2 pipeline, which now looks dead. Given recent developments, it would be hard/if not impossible, for Germany to move forward with a second line,” said Carolyn Kissane, clinical associate professor and academic director of the graduate program at the NYU School of Professional Studies Center for Global Affairs.
Moscow’s actions “may have sounded the death knell on the future of Nord Stream 2,” however, Kissane continued, “it was perhaps a bit of a diplomatic carrot - if Russia plays by the rules, the pipeline still has a life.”
In April 2017, Nord Stream 2 AG signed the financing agreements for the Nord Stream 2 gas pipeline project with ENGIE, OMV, Royal Dutch Shell, Uniper, and Wintershall for long-term financing of 50% of the total cost of the project.
US sanctions
Consultations between Germany and the US to coordinate efforts to stop the pipeline if Russia further invaded Ukraine have been ongoing. On Feb. 23, US President Biden reversed a 2021 decision to waive sanctions on the entity and corporate officers behind the pipeline (OGJ Online, July 22, 2021).
"Yesterday, after further close consultations between our two governments, Germany announced that it would halt certification of the pipeline. Today, I have directed my administration to impose sanctions on Nord Stream 2 AG and its corporate officers. These steps are another piece of our initial tranche of sanctions in response to Russia’s actions in Ukraine. As I have made clear, we will not hesitate to take further steps if Russia continues to escalate," Biden said.
"Through his actions, President Putin has provided the world with an overwhelming incentive to move away from Russian gas and to other forms of energy," he continued.