Nord Stream 2 Pipeline

Why in news?

The Nord Stream 2 (NS2) running from Russia to Germany across the Baltic Sea has been completed.

What is Nord Stream 2 (NS2)?

• NS 2 is an expansion of Russia’s existing Nord Stream gas pipeline to Germany across the Baltic Sea.
• The total capacity of two strings of Nord Stream 2 is 55 billion cubic meters of gas per year.
• NS2’s manufacture began in 2016 and construction in 2018.
• The 1,224 km, $11-billion underwater link is the shortest, most economical and environment-friendly route to double Russia’s gas export to Germany.

What is the significance of the project?

• European gas prices have broken records this year, edging close to an unprecedented $1,000 per thousand cubic meters.
• Due to lack of viable alternatives to gas, low storage levels because of a severe winter and the post-COVID-19 economic surge, NS-2 is of greater significance.
• It provides Russia with more direct access to the European gas market.
• National governments and local authorities are set to benefit economically from investment and employment in the pipeline.

Why is the project controversial?

• Ukraine’s concerns - Ukraine offered extra transit capacity for Russian gas to Europe but Russia booked only 4.3% of it, citing domestic demand.
• It believes the pipeline is a Russian geopolitical weapon aimed at depriving Ukraine of crucial revenue.
• If Russia cuts its transportation of gas through Ukraine, it would lose billions of dollars in transit fees.
• Ukraine whose viability is dependent on Russian fossil fuels through its territory, fears that Russia could reduce energy supplies by cutting those needed for Ukraine’s consumption.
• Fears that this project would give Russia a freer hand for military actions in Ukraine is another concern.
• Poland’s stand - Poland says that that gasline project is anti-competitive.
• It alleges that NS2 is Russia’s most daring attempt to break up the EU.
• USA’s Concerns - USA opposes the pipeline, arguing that it would increase Moscow’s leverage over European countries.
• The United States has just strengthened the Western Alliance by sanctioning NS2.
• Germany’s stand – Germany supports the project as dozens of German businesses have invested in this project.
• But Germany is yet to issue an operating licence in order to expedite the start of NS2.
• EU energy policy – In NS2, Gazprom is the gas producer and supplier and this violates the market-oriented EU energy policy that mandates auctioning the transportation to third parties.

Does the project seem viable?

• To enable a consensus on NS2, Germany has promised assistance to Ukraine for development of hydrogen energy.
• This environmentally friendly hydrogen option presents scope for accommodating the requirements of German coalition politics and support for the Ukraine turning NS2 into a win-win proposition.

Source: The Hind