Wednesday, 23 February 2022 08:01

Could Nord Stream 2 still be resurrected?


The White House said on Tuesday (22 February) the development of Nord Stream 2 is “not moving forward at this point in time” after steps by Germany to halt the Baltic Sea gas pipeline project. But spokesperson Jen Psaki declined to say whether Germany’s decision was reversible.

Germany halted the certification of the undersea pipeline project, designed to double the flow of Russian gas direct to Germany, on Tuesday, after Russia formally recognised two separatist regions in eastern Ukraine.

Germany halts Nord Stream 2

Germany has put a halt to the certification of the controversial Nord Stream 2 pipeline in response to Russia’s recognition of the two breakaway regions in the Ukrainian Donbas and announced that it would revaluate the procedure.

Europe’s most divisive energy project, worth $11 billion, was completed last September but before starting operations, it needs certification by Germany and the EU. The German certification process began on 8 September 2021 and the German regulator had until 8 January to reach a draft decision on the pipeline certification.

Thereafter, the European Commission has between two and four months to review the German decision and make its own recommendations, which the German side is obliged to comply with.

Psaki’s comment during a White House news briefing raised concerns among US lawmakers and other critics that the project could be resurrected at a later stage.

The pipeline has many backers among Germany’s Social Democrats and the country’s suspension may eventually amount to mothballing Nord Stream 2 now and greenlighting it in better times.

Explainer: How a German ‘climate’ fund fought US sanctions against Nord Stream 2

A German politician set up a state-backed foundation with Russian energy company Gazprom last year to help Moscow avoid US sanctions on a pipeline due to carry Russian gas to Europe.

The suspension of the pipeline certification could be challenged in court under the terms of the Energy Charter Treaty, an international fossil fuel treaty that dates back to the 1990s, and if the ruling should find the measure excessive, the German government would end up paying heavy fines.

The pipeline was aimed at diversifying energy supplies for Europe, but ran into opposition from Washington and within the European Union, amid concerns that it would increase Europe’s dependence on Russian energy supplies and could destabilise Ukraine, for which gas transit has played the role of an insurance against attack from Russia.

Republican Senator Ted Cruz said the US sanctions were “a step in the right direction” but insisted they needed to be paired with US sanctions on the companies involved in the pipeline, which the Biden administration has waived thus far.

James Treanor, special counsel and sanctions expert at the Cadwalader law firm, said that Germany’s halting of the pipeline came as a relief to many on both sides of the Atlantic, but that the project could still proceed at a later stage.

“What Germany has done is essentially put that issue on ice. But certainly the German action is subject to review and could be revisited later on,” he said.

Nazak Nikakhtar, a former senior US Commerce Department official and partner with the Wiley law firm, said Psaki’s comment about the pipeline was most likely intended to leave a “possibility to adjust and pivot,” if needed.

“You always have to leave yourself wiggle room,” she said.

The Nord Stream 2 future will be discussed at an conference organized by EURACTIV.bg on Thursday.

Book your seat for the virtual conference ‘Nord Stream 2 – Not a bargaining chip!’ on 24 Feb with @svitlanaza @KubiliusA @idvassilev @ASabadus
Full program and link for registration here https://t.co/Fahir07znk pic.twitter.com/2q0834gxOn

— Georgi Gotev & EURACTIV.bg (@GeorgiGotev) February 11, 2022