More pressure on gas prices in Europe: Nord Stream 2 will not operate until early 2022

Russia has assumed that the controversial Nord Stream 2 gas pipeline, which will transport Russian gas to Germany across the bottom of the Baltic Sea and bypass transit through Ukraine, will foreseeably not start operating until early 2022. Russian gas could have alleviated the crisis energy prices hitting Europe. It is expected that with the arrival of winter the price of natural gas will be even more expensive.

“The work is finished. Now the process to obtain the necessary permits from the German regulator is underway. This process turns out to be not fast under German law. It is about four months. It has been indicated that it will be at the beginning of 2022”, Russian Foreign Minister Sergey Lavrov said in Dusambe, where he attended a meeting of the post-Soviet alliance Collective Security Treaty Organization (CSTO).

The German energy regulator received the necessary documentation on the 8th and now has until January 8, 2022 to decide whether to certify Nord Stream 2. To do this, it must analyze whether the infrastructure complies with the European Union (EU) directive known as the Third Energy Package and report its findings to the European Commission (EC).

Last August a German court determined that Nord Stream 2 is not exempt from EU energy rules, which stipulate that companies that produce, transport and supply gas within the community block must be separated or “unbundled” in order to guarantee competition in the market, which poses a problem.

The Russian gas controversy

The Russian gas giant Gazprom has owned 100% of the shares of Nord Stream 2 since 2017, which has been built with the financing of the French companies Engie, the German companies Uniper and Wintershall, the Austrian OMV and the Anglo-Dutch Shell.

Recently, the Russian government reported that the largest Russian oil company, Rosneft, controlled by the Russian state like Gazprom, asked to export gas through the gas pipeline.

Deputy Prime Minister Alexander Novak told the Russian media today that in the next few days he will present a report to the cabinet of ministers on this possibility.

“The deadlines are already approaching. In the next few days (in the cabinet of ministers) the report of the Ministry of Energy will be received and, consequently, the Government will inform the president,” Vladmir Putin, said when asked if the State would evaluate the Rosneft’s request to transport gas through Nord Stream 2.

Its two lines, each 1,234 kilometers long, have a capacity to transport up to 55,000 million cubic meters of gas per year directly to Germany.

This, added to the 55,000 million cubic meters of its “twin” gas pipeline, the Nord Stream, will allow Russia to raise its annual gas supply to 110,000 million cubic meters.

For the US and some community partners there will be dependence on Russia

In the United States and in some eastern European countries, the gas pipeline raises concerns, considering that it increases the energy dependence of the European Union (EU) on Russia, which no longer depends on Ukraine to transport its gas to the Old Continent.

Moscow has always defended, together with Germany, that it is an economic and not a political project, and that, with the gas pipeline, the costs for European final consumers will be lowered due to the almost 2,000 kilometers less that Russian gas must cross to its destiny that if it makes it through Ukraine.

This is at a time when gas prices in the European futures markets are already over $ 950 per thousand cubic meters.

The Kremlin spokesman, Dmitri Peskov, reiterated today that the prompt receipt of the pertinent licenses to start up the gas pipeline “will of course allow a significant balancing of the parameters of the price of natural gas in Europe (…)”.

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