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Friday, July 13, 2018

Nord Stream 2, the pipeline that irritates Donald Trump

Por Nina

A cost of US $ 11,000 million, a length of over 1,200 kilometers from the Russian coast to Germany and the transport of some 55,000 million cubic meters of gas per year. It is the Nord Stream 2, the megaproject promoted by the governments of Moscow and Berlin to build the second branch of a pipeline between the two countries, but which now strains the relations of the Angela Merkel government with the United States and with some members of the Union European (EU). Already some nations of the bloc had expressed their reluctance about future works and this Wednesday Donald Trump joined the criticism.

During his speech at the NATO summit taking place in Brussels, the US president said that Germany is "totally controlled" and "captive" of the Kremlin since, according to the president, "between 60 and 70% of the energy "What the European country will need will come from Moscow. "We have to talk about the thousands and billions of dollars that are being paid to the country we are supposed to protect ourselves from," the president said.

The German Chancellor, Angela Merkel, who grew up in East Germany, dismissed the accusation shortly afterwards and replied that she had already experienced what it was like to live under the control of the Soviet Union and that she was happy about the freedom that her country was living today. The Kremlin, for its part, questioned what it considered "attacks" against the Nord Stream and considered it an attempt to force Europeans to buy liquefied natural gas at a higher price from other suppliers. "With regard to, as it were, the orchestration of attacks on this commercial project, we consider, and we have already said, that it is a manifestation of unfair competition," said the spokesman of the Russian Presidency, Dmitri Peskov.

Although Germany is currently Russia's largest gas export market, only 20% of the energy produced in the European nation comes from that raw material, according to data from consultancy Marex Spectron. But the new gas pipeline is not only in the sights of the United States government. Its construction was temporarily blocked by the EU, following an almost en bloc opposition of Eastern European countries, led by Poland and Ukraine, which claim that the project represents a threat to regional security. Germany, for its part, believes that Europe's energy security will increase, while Moscow claims that those who oppose Nord Stream 2 are only concerned about their own economic benefits.

But why is so controversial the new phase of this gigantic gas pipeline that will cross the seas of five countries? In practical terms, the new gas pipeline will follow a similar route to the first phase of the Nord Stream, although this time it will start from the Narva Bay, in the Leningrad region, to the city of Greifswald, in Germany. And, according to the project, will increase the volume of exports from Russia to Bavarian coasts in more than double the current amount, for a total of 1 billion cubic meters of gas per year.

Fred Beach, deputy director of Energy Policy and Technology at the Energy Institute of the University of Texas at Austin (USA) explains to BBC World that Germany is interested in the construction of the gas pipeline, its profitability and the growing energy demand of the European country. "As Germany plans to give up nuclear power by 2022, it is becoming increasingly dependent on natural gas and that is why the gas pipeline becomes an economically viable option," he says.

However, the background of the idea by the German side was in question from its inception: the architect in 2005 was a friend of Putin, former Chancellor Gerhard Schröder, who approved the project as one of the last acts of his mandate. Since then, he himself supervises him as leader of the shareholder committee of Nord Stream AG. However, beyond this, Beach points out that the idea of building a gas pipeline of this type is in itself one of the most efficient and safest ways to move gas between one country and another. "The pipeline significantly reduces the cost of importing compared to what it would take to transport that gas by ship," he explains. But at the same time, he points out that this physical connection through pipes between two countries can be a potential risk.

"Like the Nord Stream 1 test, the pipeline is an effective mechanism that reduces the cost, it is an efficient way to move the gas, but at the same time, it physically connects you with a single supplier from a single country and that constitutes a possibility of huge dependence, "he says. According to the expert, one of the drawbacks of these structures is that they can only be built from a point of origin to a destination, which implies a long-term agreement and inflexible contracts. "And that is where one of the most acute points of the debate appears: Russia would become stronger and for many it is not a reliable supplier, because it can have double intentions beyond a greater control of the European energy market," he adds. In fact, one of the arguments of those who oppose Nord Stream 2 is the supposed background behind the Russian initiative to expand its gas exports to Europe. "This is not a commercial project, it is not economic or profitable, it is absolutely a political project," Ukrainian President Petro Poroshenko, one of his main opponents, said this week. And is that one of the pipes through which gas is currently sent to Europe from Russia crosses Ukraine, so Moscow must pay Kiev billions of dollars each year for its use.

However, in 2014, during the Russian invasion of part of the country, the Kremlin suspended the gas supply and only the pressure of the EU led to its restoration. "The conflict with Ukraine has also led Russia to look for alternatives and this gas pipeline is fundamental, because such a project has no international borders, so no matter what happens in Ukraine, the flow of gas will continue," says Beach. "This, logically, as long as Moscow wants that flow to continue, a deliberate interruption or not could create a very complicated situation for Germany," he says.

Russia, for its part, alleges that after the denunciations of the Kiev government only the economic interests of that country are hidden and that the gas pipeline only seeks to reduce the costs of gas exports, which would fall by 20%, according to figures from Kremlin. But for Moscow, after the criticisms of the United States, economic interests are also hidden: to try to control that market. "It is true that the United States is a major exporter of natural gas and is building infrastructures to make that gas more competitive internationally, but in this case we are talking about a real risk that Germany will lose its independence in the energy field," says the professor at the University of Texas.

"Berlin is forgoing to produce nuclear energy for greater energy independence, but with this it is being tied even more to a single supplier," he says. According to the specialist, other EU countries have recently practiced other strategies to avoid greater dependence on Russian gas. "Lithuania, for example, recently opened a terminal for the importation of natural liquefied gas, which is looking to buy it in a more open market, more independent of Russia. If small countries like this have opened these terminals that offer them greater independence, it is curious Germany is not able to follow that example," he says. According to the expert, although it is still unknown if the second phase of the Nord Stream will come to an end, its first effects are already beginning to be felt: they have created a new gap between Germany, the United States and the European Union, something that it considers very interests of Russia.