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Has Putin overplayed his hand on Nord Stream 2?

David Thomas / Dec 2021

Image: Shutterstock

 

Myron Wasylyk, adviser to Ukraine’s state-owned Naftogaz CEO Yuriy Vitrenko, says the latest Russian military menace against his country is just the latest in a series of moves by Russia designed to test the resolve of the West.

Others include the weaponization of immigrants on the Belarus-Polish-Lithuanian border and the construction of the Nord Stream 2 gas pipeline.  

“The Russian way of doing things is to test the waters and the resolve of the West, whether it’s the Belarussian border with Lithuania or with Poland or Nord Stream 2.”

But Wasylyk says Putin has overplayed his hand on Nord Stream 2 and urges the EU and US to stand firm against the latest Russian threats. The new German government looks set to take a tougher line on NS2 and German regulators have suspended the NS2 approval process until the company complies with EU Energy Directives.

As Green MEP Reinhard Bütikofer sums up: "Nord Stream 2 should not be a pawn in this conflict. The pipeline must be stopped according to European law, and there should also be strong deterrence against a new Russian attack on Ukraine."

“Those saying that somehow Putin can use Nord Stream 2 as a tool – I quite frankly don’t see the possibility of NS2 being legally certified until the end of next year, and that’s at the earliest”.

US officials have already indicated that approval of NS2 could potentially be used as leverage against Russia in any bid to resolve the Ukraine-Russia border tensions.

Naftogaz says that EU hopes that NS2 could bring lower gas prices are entirely misplaced. Prices are high because Russia is restricting supply in order to achieve wider political objectives. There is more than enough spare pipeline capacity to significantly boost gas supply to Europe without it.

“Prices could come down if the supply is increased but they are not going to come down because of Nord Stream 2 for sure. Gazprom and Putin are pushing this fallacy that if you certify us quickly the price will come down – that is absolutely not true”.

Ukrainian pipelines currently have capacity of 140 billion cubic meters, of which Russia has booked 40bcm for its gas deliveries, but current deliveries of gas are currently only running at 30bcm.

“…if the Russians really wanted to send gas to Europe, they could have used the Ukrainian pipes or other pipes. We view it as a political project.”

By not pumping gas through the Ukraine pipeline, Russia is raising the issue, not only of national security, but also of security of supply. While Russia has clearly increased production in recent months, none of that has been shipped to Europe, although deliveries to China and Turkey have been boosted.

Gazprom has been booking less capacity through the Ukrainian pipe each month since June 2021, he says.

“Every month it pumped less gas than contracted, we saw the price in Europe rise. So, we see a direct correlation between the amount of gas sent through Ukraine’s Druzhba pipe and the price rise on the European market”.

In the face of this energy blackmail, the EU and Germany, he says, should stick to the rules, ensuring that Nord Stream 2 gas supply and pipeline operations are unbundled, third party access, and transparent, cost-reflected and regulated tariffs.

“Because right now none of these criteria in the third EU gas market directive are being met by NS2 and until they are there can really be no certification or operation of that pipe.”

Wasylyk says sanctions on the pipeline project would not be going too far:

“Our position is that sanctioning it for a year or two, would allow NS2 to get its papers in order so that NS2 can be certified by the German and EU regulators.”

“We don’t view sanctions as an evil thing but as a way to use political pressure in Europe and give NS2 the opportunity to do things legally, instead of have Putin push it through like he is trying to do.”

 

 

David Thomas

David Thomas

December 2021

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