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Germany halts Nord Stream 2 gas pipeline project after Russia’s moves on Ukraine

Berlin has called a halt to the project after Russia formally recognized the independence of the two breakaway regions in eastern Ukraine.

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Berlin: German Chancellor Olaf Scholz has called a halt to the Nord Stream 2 Baltic Sea gas pipeline project as a result of Russia’s “invasion” of two separatist regions of Ukraine.

The Nord Stream 2 pipeline was meant to enable a doubling of the amount of natural gas from Russia to Germany. Berlin has called a halt to the project after Russia formally recognized the independence of the two breakaway regions in eastern Ukraine.

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The pipeline was to help Germany meet its energy needs, particularly as it switches off its last three nuclear power plants and phases out the use of coal. The gigantic energy project, worth $11 billion, was completed in September of 2021, but had not been put into operation since it had become embroiled in international politics, awaiting certification by Germany and the European Union.

The US, the UK, Ukraine and several EU countries have repeatedly stated their opposition to the Nord Stream 2 ever since it was announced back in 2015, for fear that it would further increase Moscow’s influence in Europe. The pipeline was capable of delivering 55 billion cubic meters of gas per year, just over 50% of Germany’s annual consumption.

Experts believe it could have been worth as much as $15 billion to Gazprom, the Russian state-owned company that controls the pipeline. Europe and much of the rest of the world are experiencing record-high energy prices due to a confluence of factors, including post-pandemic issues. To deal with the gas shortage and hike in prices, European governments have already begun to issue vouchers to their citizens to try to offset the hikes. Nordstream 2 had been meant as a way to ease the perennial energy crunch that Europe faces during especially cold winters.

The European benchmark gas price was up 10% to 79.28 euros per megawatt hour (MWh), similar to the prices seen in the fourth quarter of last year, when the pipeline had been expected to start pumping its precious product to the West.

Meanwhile, Dmitry Medvedev, Russia’s former president and its current deputy chairman of its Security Council, taunted Western leaders today in a Tweet, saying “Welcome to the new world where Europeans will soon have to pay 2,000 euros per thousand cubic metres!” This was seen as a clear indication that gas prices could soon double, with one week left in February to go. However, Russian President Vladimir Putin promised that Russia would not interrupt any of its existing gas transport to the West.

Germany, which receives half its gas from Russia, had previously maintained that the Nord Stream 2 had been first and foremost a commercial project that was meant to diversify energy for Europeans. But the project bore the brunt of continual assaults, with a range of countries from within Europe, along with the US, decrying the pipeline, saying that it would only serve to increase the West’s dependence on Russia for its energy needs.

It would also, they charged, deny important fees paid to Ukraine, which also has a Russian gas pipeline, and in the end make it more vulnerable to invasion from Russia. Nord Stream had been a point of contention between Germany and the US for years, with American officials concerned that the pipeline would stoke yet more tensions between Russia and the West. Meanwhile, Ukrainian Foreign Minister Dmytro Kuleba congratulated Scholz on his difficult decision on Tuesday.

“This is a morally, politically and practically correct step in the current circumstances,” he said in a Tweet, adding “True leadership means tough decisions in difficult times. Germany’s move proves just that.” The German chancellor told the press as part of his remarks that “The appropriate departments … will make a new assessment of the security of our supply in light of what has changed in last few days.”

German Economy Minister Robert Habeck gave assurances that the country’s gas supply was secure even without the addition of the supplies that would have come via Nord Stream 2. He acknowledged, however, that energy prices were indeed likely to rise in the short term.

Russia’s state-owned entity Gazprom owns the whole pipeline but paid half the costs of the already-completed project, with the rest paid by Shell, Austria’s OMV, France’s Engie and Germany’s Uniper and Wintershall DEA. Germany’s Federal Network Agency, which is in charge of regulating the country’s electricity, gas, telecommunications, post and railway sectors, had already suspended the certification process in November, while saying at the time that Nord Stream 2 must register as a legal entity there.

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