Thursday, April 22, 2021

Nord Stream 2: german politicians seek to mitigate the impact of the sanctions

 Source WELT:

US President Joe Biden was barely confirmed in office when CSU boss Markus Söder tweeted: “The transatlantic bridge is being built.” Meanwhile, despite all the relief about Biden's more cooperative political style, it is clear that some traces of this bridge are still clear “America first” applies.

A current example of this is the almost completed Nord Stream 2 gas pipeline, which is increasingly coming into the focus of the US government in view of the growing tensions with Russia - and is therefore putting pressure on the German government.

The Americans want to prevent the pipeline from Russia to Germany "at all costs," as Biden and other top US politicians emphasize. And the stronger the friction with Russia, currently fueled by the imprisonment of the Kremlin critic Alexej Navalny and Russian troop concentrations along the border of Ukraine and on the Crimean peninsula, the stronger the pressure of the USA on the German government.

In the factions of the grand coalition, the tough US course is leading to the realization that the 1,200-kilometer pipeline can only be completed at a high - possibly too high - foreign policy price.

A plan B is needed. There are now more votes in the CDU to put the building on hold for the time being. And in the SPD it is said that the company can be linked to political conditions for Russia.

"We need a face-saving solution for all sides, a moratorium could be one," says the CDU Federal MP and foreign policy expert Roderich Kiesewetter WELT.

Several CDU politicians had previously spoken out in favor of examining such a moratorium, including Defense Minister Annegret Kramp-Karrenbauer and the Federal Government's coordinator for transatlantic cooperation, Peter Beyer (CDU). A majority in the parliamentary group, including politicians like Kiesewetter, has so far been skeptical of this. Apparently, some people are now starting to rethink.

The foreign policy spokesman for the SPD parliamentary group, Nils Schmid, explains: “I don't see that the project can be stopped now, so close to completion. It is also questionable whether political majorities could be organized for this in a short period of time. However, it would be possible to make the operation of Nord Stream 2 subject to certain conditions. We should talk about that. "

So far, the SPD has been fairly closed behind the pipeline through which 55 billion cubic meters of gas are to flow into the European Union every year: the prime ministers in East Germany as well as finance minister and chancellor candidate Olaf Scholz and party leader Norbert Walter-Borjans.

Mecklenburg-Western Pomerania's Prime Minister Manuela Schwesig (SPD) was instrumental in establishing a so-called environmental foundation, the purpose of which is actually to support the pipeline that is to end in Lubmin near Greifswald.

And the chairman of the board of directors of the project company for Nord Stream is known to be former Chancellor Gerhard Schröder (SPD).

The fact that the SPD is now calling for the operation of the pipeline to be linked to political conditions, which, depending on the political situation, could quickly lead to an actual shutdown, is a new tone. Ex-party leader Sigmar Gabriel recently told WELT that, from the point of view of European sovereignty, Nord Stream was “initially none of your business”.

That is exactly what the Americans see differently.

Because unlike Donald Trump, who wanted to prevent the underwater pipeline between Russia and Mecklenburg-Western Pomerania through the Baltic Sea also in order to be able to sell American liquefied natural gas to Europeans more easily, Biden and a number of influential US politicians are not only interested in energy policy.

But above all, to get your hands on another instrument with which Russia can be put in its place. Nord Stream 2 falls under the geopolitical category in Washington.

Influential members of Congress see Nord Stream 2 not only as a danger to Europe, but also as a massive threat to American security interests. With the pipeline, Russia would get a "geopolitical tool", warn Senate members James Risch and Jeanne Shaheen. The pipeline would “tie up” Europe to Russian gas and thus expose “the next 40 years” to political constraints, the Republican and the Democrat wrote in a letter to Biden.

A few days later, Congressmen Michael T. McCaul (Republican) and Marcy Kaptur (Democrats) replied in a letter to US Secretary of State Antony Blinken: “If completed, Nord Stream 2 would enable Putin's government to continue using Russia's energy resources as a weapon to exert political pressure on all of Europe. "One must counteract the evil influence of Russia, also by making sure that Nord Stream 2 is never completed". Both letters are available to WELT.

Chancellor Angela Merkel (CDU) had long described the billion dollar project as a purely economic project, so there was no reason for the federal government to intervene. But of course the gas pipeline is highly political.

And that's also because it triggers criticism not only in the USA, but everywhere in Europe - and that primarily affects the federal government and not the companies involved, Gazprom or, on the western side, Wintershall, Uniper and others, which do not hold any shares hold more of the project company for the pipeline, but remain committed to the project.

All EU institutions reject Nord Stream 2 as incompatible with a common European energy policy, and the Baltic states, Ukraine and Poland feel that they have been bypassed in the truest sense of the word. The southern Europeans resent the federal government for sticking to Nord Stream, but preventing the southern variant, South Stream. France recently warned the Germans to put the project on hold. In addition, environmentalists are storming against it, and economists are questioning the economic viability.

A moratorium could be a way out of the dilemma - believes Kiesewetter's group. And a political signal. "A moratorium would be a sign to the Russian government that we will not simply accept cases such as the imprisonment of Alexei Navalny, the actions of the Russians in eastern Ukraine or the annexation of Crimea," said the CDU MP.

However, he also sees the problem of such a solution: "It is clear that such a moratorium does not exist for free, the consequence would be contractual penalties for which the federal government should be responsible."

The project could cost up to ten billion euros; the submarine tube is currently 95 percent complete. Experts estimate that if it is not completed, claims for damages could accrue that are also in the billions. Money that the taxpayer would have to raise.

It is clear to those in favor of this solution that this will not go down well, especially in a super election year. "An alternative to a moratorium could be to complete the natural gas pipeline, but then not obtain any Russian gas until the open foreign policy issues have been resolved, in other words a kind of shutdown mechanism," suggests Kiesewetter.

The CDU politician is thus quite close to the ideas of the SPD foreign politician Schmid: “With this solution, we would not come under time pressure. That only arises when you aim to demolish construction, ”he says.

“In addition, in this case the state would not be confronted with high claims for damages, which would inevitably threaten in the event of a moratorium. In the case of operational requirements, if they are motivated by foreign policy, we could invoke the law of sanctions. ”This would mean that companies would not be able to sue for compensation.

It is questionable whether this course has a majority in the SPD. And in the CDU-led Ministry of Economics, they don't want to hear about such initiatives. The federal government is neither a contractual partner nor can and should determine the conditions under which gas will flow through Nord Stream 2 and be accepted, it says.

Mind games about "a de facto expropriation" would have a fatal effect on investors and the location. Alternatives to aborting the pipeline plans are negotiations with the Americans and other partners about an "energy partnership", technology transfers to expand renewable energies in the USA or investments in the gas network in Ukraine.

Foreign politician Schmid suggests that we first sound out the intentions of the US government and come to an agreement with it “whether we want to use energy policy as a sanction tool against Russia at all. And what goals we are pursuing if we slow down Nord Stream 2 now. The release of Navalny? The withdrawal from Donbass or from the Crimea? "

What is needed is an overall concept. "To concentrate solely on Nord Stream now to put pressure on the Kremlin is probably not very effective and not honest on the part of the Americans," said Schmid. "Because they buy large quantities of oil in Russia at the same time."

Nord Stream 2: How Russia is bypassing the sactions with help of European countries

 An interesting investigation by german newspaper WELT:

US Secretary of State Antony Blinken never tires of repeating what top Washington officials have been saying for more than a decade. At the meeting with Germany's Foreign Minister Heiko Maas in Brussels two weeks ago, Blinken emphasized that the USA rejected the Nord Stream 2 gas pipeline. In an interview with NATO Secretary General Jens Stoltenberg, Blinken said that US President Joe Biden considers Nord Stream 2 to be a “bad idea”, bad for Europe and the USA. The American Secretary of State is expected to hold new talks in Brussels on Tuesday.

In a recent interview with the television broadcaster CNN, Blinken stated that there was no ambiguity in the American position: close German-American relations on the one hand, and a fundamental rejection of Nord Stream 2 on the other. The spokesman for the US Embassy in Berlin, Joseph Giordono-Scholz, also made it unequivocally: The White House "is determined to use all available levers to prevent the completion of Nord Stream 2".

It is more than clear: the USA wants to do all it can to prevent the eleven billion dollar project, which many critics between Kiev and Brussels describe as Russia's geopolitical project. The pipeline between Russia and Germany running on the bottom of the Baltic Sea is 95 percent complete and in the long term would make gas transit via Ukraine superfluous.

A weakening of Kiev has been in Moscow's interest since 2004 at the latest, when the country committed itself to the west course with the “Orange Revolution”. This is currently also proven by the Russian deployment on the Ukrainian border. In Berlin, however, the criticism has so far been restrained. From a German perspective, Russia's saber-rattling clearly has no impact on the future of Nord Stream 2.

At first glance, it would not take more than one last effort to complete the controversial project - if it weren't for the American sanctions that forced the Swiss service provider Allseas and its high-tech lay vessels to withdraw from the project. According to the US media, the Biden government is preparing a new round of sanctions. The content remains unknown so far. The target of these new sanctions could be Nord Stream 2 AG, the official builder of the pipeline, and CEO Matthias Warnig.

But at least the previous extraterritorial sanctions of the Americans, which triggered criticism in Germany, not least from Chancellor Angela Merkel, could be more holey than initially assumed. Despite intensive efforts by Nord Stream – 2 critics such as Poland, construction is progressing. Warsaw recently canceled the registration of two supply vessels registered in Gdansk and sailing under the Polish flag. These are said to have been involved in the construction of the pipeline.

But the special ship "Akademik Tscherski", which Russia intends to use for the completion of the pipeline, appears to be invulnerable to attacks by the opponents of Nord Stream 2. For almost a year, after his adventurous relocation of Russia's offshore projects on the Pacific to the Baltic Sea - at that time, Akademik Tscherski was sometimes accompanied by warships of the Russian Navy, it frequently changed course and destination, apparently to confuse the Americans - it has been commuting Ship between German ports and the Russian Baltic exclave Kaliningrad. In December, the German waterways and shipping administration said that the laying vessel was ready for use.

It was apparently retrofitted with European technology - despite sanctions, as the Russian-language service of Deutsche Welle reported with reference to Russian and German customs data from the ImportGenius database. According to this, Russian companies that have not appeared so far have purchased systems for pipeline construction from suppliers for a total of ten million dollars from the Netherlands and Italy, which the owner of the laying ship Akademik Tschersk had re-exported to Germany.

According to the research, suppliers such as Nuova Patavium srl from the northern Italian region of Veneto have split orders into individual deliveries that should have triggered US sanctions under the “Countering Russian Influence in Europe and Eurasia Act”. These remained below the sum of one million dollars - this was how it was possible to avoid attracting the attention of US authorities.

Thanks to such tricks, the construction of Nord Stream 2 continues undisturbed and fits into a long series of manipulations that are intended to lead US authorities astray. On paper, for example, Akademik Tscherski no longer belongs to the marine division of Gazprom since last year, but to an obscure infrastructure management fund from the Russian region of Samara, which previously belonged indirectly to the Russian energy company. Today it can no longer be proven that the fund is controlled by Gazprom, its real owners are unknown.

As reported by Russian media, the Fortuna lay vessel has completed half of the previously outstanding section of the pipeline in Danish waters. The section should be ready by the end of May, according to a message from the pipeline builder to Denmark's Energy Agency - partly with the help of Akademik Tscherski. The ship arrived at the construction site on Monday, as reported by Russian media.

This is good news for Mecklenburg-Western Pomerania's SPD Prime Minister Manuela Schwesig and her controversial “Foundation for Climate and Environmental Protection MV”. The organization, largely financed by Gazprom, which critics such as the FDP member of the Bundestag Alexander Graf Lambsdorff call "Fake Foundation", is supposed to promote climate and environmental protection projects in science and research, but also finance projects at daycare centers and schools. At the same time, the “completion of the Nord Stream 2 pipeline” is one of the goals of the foundation. That is a "temporary secondary purpose", says Erwin Sellering, head of the foundation and former Prime Minister of Mecklenburg-Western Pomerania.

A secondary purpose with far-reaching geopolitical consequences, as Sellering openly said in an interview with Deutschlandfunk Kultur, the foundation is supposed to be a kind of insurance policy for Gazprom. If the talks between the German government, the EU Commission and Joe Biden's government about the future of the pipeline should fail, they are “ready to help”. The Russian state energy exporter Gazprom is at least not making its tricks public - it does not seem to be a problem for a German state government to openly offer help to circumvent sanctions.

But this help could be unnecessary. Akademik Tscherski should start work shortly, then the construction work has reached the home straight: the last 120 kilometers in Danish waters, the most complex construction section of Nord Stream 2. The completion of the pipeline will then take a matter of months. According to Gazprom board member Viktor Zubkov, the pipeline will be completed this year: “It's a shame about the lost time, but that's how it happened,” commented Zubkov at a press conference.

Tuesday, February 23, 2021

Nord Stream 2: 18 companies draw back due to impending US-sanctions

 German newspaper WELT writes:

The USA's threats of sanctions against the German-Russian Baltic Sea gas pipeline Nord Stream 2 are having an effect: After considerable pressure from the government in Washington, at least 18 European companies have now ended their participation in the controversial project or have promised to withdraw, as stated in a report by the US State Department to Congress. According to the information, the companies include the industrial service provider Bilfinger from Mannheim and the Munich Re insurer Munich Re Syndicate Limited.

So far, the United States has only imposed sanctions on the Russian company KVT-RUS, which operates the Fortuna laying ship, because of Nord Stream 2 - the government of the Republican US President Donald Trump announced these punitive measures shortly before the end of her term in January. The company and the ship are also specifically mentioned in the new report. Contrary to expectations, other companies are not punished or threatened with punitive measures.

Wednesday, February 3, 2021

Nord Stream 2: are stakeholders backing away?

 Asked by german newspaper BILD on it's opinion about the crackdown on protesters in Russia and the future of Nord Stream 2, the oil and gas producer Wintershall gave sibylline answer that that might be understood as a subtle sign of alienation:

The situation in Russia is escalating. And in the Baltic Sea, the Nord Stream 2 gas project is continuing unmoved. But in view of the serious human rights violations by the regime of Vladimir Putin, at least one German partner of "Nord Stream 2 AG" now seems to have moral concerns about the progress of the Russian billion-dollar project.

The Kassel-based company Wintershall Dea responded unusually openly to a BILD request on Monday and sent an answer that is deeply insightful.

BILD asked Wintershall Dea: In view of the brutal crackdown on the democracy protests in Russia, is your company's cooperation with the state-controlled "Nord Stream 2 AG" still compatible with your corporate principles?

The answer: “We are watching the current developments in Russia with concern. Here, however, politicians in Berlin and Brussels have to decide how to behave and what measures they want to take if necessary. "

A bombshell: Chancellor Merkel emphasizes again and again that Nord Stream 2 is “an entrepreneurial project” and that the Navalny case and its consequences in Russia must be “discussed separately”.

At Wintershall Dea, which has invested several hundred million euros in Nord Stream 2, the view is obviously different - but it plays the ball back where it belongs: with the German government and the European Union.

▶ ︎ In addition, the company stated that it would not provide the Russians with any more money - although construction has been delayed for over a year and costs are rising steadily.

A company spokesman on BILD: "Wintershall Dea has paid out 730 million euros for the project, further payments are not planned."

According to BILD information, the company also wants to avoid imminent sanctions by the USA. It informed the United States Embassy in Germany about its funding stop last year.

In principle, however, the construction of the pipeline continues to be seen as justified.

Wintershall Dea told BILD that “against the background of the expected decline in the production of natural gas in Europe, the Nord Stream 2 project is a contribution to competitiveness” and could “strengthen Europe's energy security”.

However, the company admitted that the pipeline was only "one of the many solutions to the impending supply gap and one offer - without any obligation to purchase natural gas from the pipeline".

Monday, February 1, 2021

Nord Stream 2: France calls for construction freeze

In the face of the arrest and detention of Kremlin opponent Alexei Navalny and the brutal crackdown on protesters on past week-end, France calls for a suspension of the building work on contentious gas pipeline Nord Stream 2, writes german newspaper WELT

In the light of the arrest of the Russian opposition politician Alexej Navalny and the action against his supporters, France supports the stop of the Nord Stream 2 gas project. France's European Secretary of State Clément Beaune said on Monday on France Inter when asked whether he was in favor of giving up Nord Stream 2 : "Indeed, we have already said that."

Beaune said that sanctions had already been imposed, but that was not enough. Regarding other possible consequences, he added that the Baltic Sea pipeline was an option to consider. "We have always said that in this context we have the greatest doubts about this project."

In addition to France, other EU countries are rejecting the natural gas project. The European Parliament recently voted for an immediate stop to Nord Stream 2. The federal government, however, is sticking to the gas pipeline.

According to the Russian energy company Gazprom, the main investor in Nord Stream 2, 94 percent of the line has already been completed. It consists of two strings, each around 1,230 kilometers long, and is expected to be able to transport 55 billion cubic meters of natural gas from Russia to Germany per year.

Human rights activists in Russia criticized the mass arrests at rallies for Kremlin critic Navalny as unprecedented. In at least 87 cities, more than 5100 demonstrators were in police custody, reported the Owd-Info portal on Monday night. There have never been so many arrests since the organization was founded a good nine years ago. The activists help arrested demonstrators and publish statistics.

The human rights activists also complained about "disproportionately brutal action" by the security forces against peaceful demonstrators. More than 50 people were beaten when they were arrested. More than 90 journalists were arrested in 31 cities in Russia. "The police deliberately interfered with the work of the press that wanted to cover the protests," it said.

On Sunday there were demonstrations in more than 100 cities for the release of Navalny and against corruption and arbitrary justice. All of the actions were not approved. Arrest could result in a fine or imprisonment. More than a week ago, there were around 4,000 arrests during mass protests in Russia, according to human rights activists. The authorities did not comment on these numbers.

Navalny had been arrested at a Moscow airport just over two weeks ago on his return from Germany, where he had been recovering from a poison attack for five months. The 44-year-old blames President Vladimir Putin and the domestic secret service FSB for the crime. Putin and the FSB rejected that.

Saturday, January 30, 2021

EU: second IPCEI for project "European Battery Innovation"

The Commission has approved, under EU State aid rules, a second Important Project of Common European Interest (“IPCEI”) to support research and innovation in the battery value chain. The project, called “European Battery Innovation” was jointly prepared and notified by Austria, Belgium, Croatia, Finland, France, Germany, Greece, Italy, Poland, Slovakia, Spain and Sweden.

The twelve Member States will provide up to €2.9 billion in funding in the coming years. The public funding is expected to unlock an additional €9 billion in private investments, i.e. more than three times the public support. The project complements the first IPCEI in the battery value chain that the Commission approved in December 2019.


The project will cover the entire battery value chain from extraction of raw materials, design and manufacturing of battery cells and packs, and finally the recycling and disposal in a circular economy, with a strong focus on sustainability. It is expected to contribute to the development of a whole set of new technological breakthroughs, including different cell chemistries and novel production processes, and other innovations in the battery value chain, in addition to what will be achieved thanks to the first battery IPCEI.

Read more.


Thursday, January 28, 2021

Gloomy outlook for shale oile

For oil analysts and advisers Goehring & Rozencwajg the prospects for oil and especially shale oil will be murky in the forseeable future:

We believe we are on the cusp of a global energy crisis. Like most crises, the fundamental causes for this crisis have been brewing for several years but have lacked a catalyst to bring them to the attention of the public or to the average investor. The looming energy crisis is rooted in the underlying depletion of the US shales along with the chronic disappointments in non-OPEC supply in the rest of the world. The catalyst is the coronavirus.

The initial phase of the crisis that took prices negative is behind us and the next phase which, should take prices much higher, is in its infancy. Global energy markets in general, and oil markets in particular, are slipping into a structural deficit as we speak. We believe energy will be the most important investment theme of the next several years and the biggest unintended consequence of the coronavirus.


Investors’ focus has shifted to how quickly supply can be brought back to meet recovering demand. While most investors believe the lost production will be easily brought back online, our models tell us something vastly different. While OPEC+ production will likely rebound, non-OPEC+ supply will be extremely challenged. Instead of recovering, our models tell us that non-OPEC+ production is about to decline dramatically from today’s already low levels.


You can read the rest of the piece via the below link: