U.S. Threatens Europe-Russia Nord Stream 2 Pipeline

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.S. continues to threaten trade sanctions on an increased front, this time focusing its sights on the proposed Nord Stream 2 gas pipeline from Russia to Europe.

Deputy Assistant Secretary of State for Energy Diplomacy Sandra Oudkirk told German media that the government classed the pipeline as a security threat because it would allow Russia to install "undersea surveillance equipment" including listening devices in the Baltic. The U.S. has also threatened sanctions on European companies working on Nord Stream 2, including Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), OMV AG (OTC:OMVKY) (Vienna, Austria), BASF/Wintershall (Ludwigshafen, Germany) and ENGIE (EPA:GSZ) (Paris, France).

The espionage fears have been quashed by numerous European sources that point out that Nord Stream 2 follows the existing Russian Nord Stream 1 pipeline for the most part and that Russia could have bugged that line if it had wanted to long ago. Germany was also quick to point out that the threats of sanctions were nothing more than a ploy to reduce European gas imports from Russia so that the U.S. can increase its own exports of liquefied natural gas (LNG) to Europe. U.S. LNG exports accounted for 5% of Europe's LNG imports last year.

Germany's Economy Minister Peter Altmaier defended the Nord Stream 2 pipeline, citing U.S. LNG ambitions: "They are looking for markets, which we can understand, and they can land it here easily," Altmaier told German television station ARD. "But it is much more expensive than pipeline gas, so blocking Nord Stream 2 on its own won't guarantee exports."

Nord Stream 2 is seen as essential for Europe to secure additional gas supplies from Russia, which already supplies more than a third of the region's total. It will feature 1,230-kilometer twin pipelines that will have a total capacity of 55 billion cubic meters of gas, effectively doubling the capacity of the existing Nord Stream strings, which were commissioned in 2011 and 2012. The total cost of the project is estimated at 9.5 billion euro ($11.6 billion). Earlier this month, Industrial Info reported that the project has received key final permissions from Finland and Germany. For additional information, see May 1, 2018, article - Nord Stream 2 Pipeline Moves Forward.

Most of Europe's Russian gas comes via Ukraine, which the European Union (EU) is determined remains a key gas transit source. Russia and Ukraine are currently in conflict over the Crimea region within Ukraine, with Russia supplying arms and expertise to pro-Russian rebels. EU representatives and Germany's Chancellor Angela Merkel have met with Russia's President Vladimir Putin seeking assurances that, despite the conflict and the Nord Stream 2 pipeline, Ukraine will remain a key transit nation.

Altmaier added: "It's especially important to me that we don't get into a wholly unplanned and unstructured contest on three, four, five fronts around higher tariffs, higher sanctions and mutual mistrust. When the U.S. says 'America first, we'll put our economic interests in the foreground,' we should also consider that Europeans must also define our economic interests."

The U.S. is already proposing import duties of 25% on steel and 10% on aluminium exports from Europe, which are due to come into effect on June 1 unless new trade agreements can be agreed. Industrial Info reported that the EU has threatened trade sanctions against the U.S. tariffs. For additional information, see March 14, 2018, article - Europe Threatens Trade Sanctions Over U.S. Steel Tariffs.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.