Wednesday, October 16, 2019

The disastrous consequences of Nord Stream 2 on Central European countries

Mikhail Korchemkin of EEGA (East European Gas Analysis) summarizes the the outlook of domestic gas production and gas demand in Europe and the impact Nord Stream 2 will have especiall on CSEE countries if pipelines through Ukraine are decommissioned:


"And Putin himself may be a bigger danger.

The history of Nord Stream 1, which terminates in Germany just as the Nord Stream 2 pipeline is planned to do, demonstrates that he’s more than willing to use pipelines for political leverage. After the commissioning of Nord Stream 1, he wanted to keep a tight grip on gas supplies to Ukraine, reducing them when the country angered him—either by cutting off some lines or hiking prices. But when Europe announced that it would resell Russian gas back to Ukraine at a lower price than Russia had offered, Putin got angry and in June 2014 threatened to punish the involved parties—Austrian, German, and Slovakian firms—by reducing the supply of Russian gas to their home countries.

Despite Putin’s threat, the reverse gas sales went on. Believing that European consumers would be unlikely to notice any change of gas supply in the summer, Putin waited until the fall and ordered Gazprom to cut daily flows of Russian gas to Europe via Ukraine by 50 percent. In January 2015, the same reduction was applied its exports to Germany via the new and reliable Nord Stream 1. The case was never taken to arbitration court, and Putin acted as the judge and executioner.

As reported by Russia’s state news agency Interfax, that gambit resulted in a loss of $5.5 billion in revenue for Gazprom and fines of $400 million. Unfortunately for the Kremlin, the winter was warm, and the deficit in Europe was compensated by increased supplies from Norway. But for Putin, this matter was much more important than $6 billion and the reputation of Nord Stream. For him, being able to demonstrate that he could cut off supply to Europe on a whim was key. And now, with his pipeline plans fulfilled, he would be able to quickly cut off over 80 percent of the supply of Russian gas to the European Union on short notice."

You can read the rest of the piece in Foreign Policy via the below link: 

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