European Union VS Germany : Nord Stream 2

On September 4 2015, Gazprom, together with E.ON (Germany), OMV (Austria), BASF (Germany), Shell (England-Netherlands), ENGIE-ex GDF Suez (France), singed a shareholders’ agreement for the construction of Nord Stream 2 pipeline, which will double the quantity of Russian natural gas that can be sent to Europe through the Baltic Sea and Germany. You can read about the agreement at the following page from Gazprom’s site, titled “Gazprom, BASF, E.ON, ENGIE, OMV and Shell sign Shareholders Agreement on Nord Stream II project”.

Gazprom will hold 51% of the shares, ENGIE will hold 9%, and all other companies will hold 10% of the shares. The new pipeline will carry another 55 billion cubic meters of Russian gas to Germany, and the agreement is not in compliance with the European Union’s Third Energy Package. The Third Energy Package requests the break up of production, transport and sale of natural gas within the European Union. In other words the producer of natural gas cannot be the owner of the pipeline networks that carry this natural gas in the EU, and the producers and network operators cannot sell the natural gas in the markets of the European Union. Note that the European Union consumes approximately 450 billion cubic meters of natural gas every year, and approximately 150 billion cubic meters of this gas is supplied by Gazporm, the Russian state owned giant.

Recently the South Stream pipeline was cancelled, which was supposed to connect Russia to the European Union through the Black Sea and Bulgaria, because it was not in compliance with the EU anti-monopolistic regulations. Moreover the European Union has limited Gazprom’s access to the OPAL and NEL pipelines, which carry the Russian natural gas to Germany and the Czech Republic, and Germany and the Netherlands respectively, because Gazprom has large stakes in both of these pipelines, violating the EU anti-monopolistic regulations. For the OPAL and NEL pipelines see the following map.

Map 1

Map OPAL and NEL Pipelines

The agreement about Nord Stream 2 upset the European Commissioner on energy issues, Maros Sefcovic, as you can read at the following Politico article, titled “Šefčovič warns energy firms over Nord Stream II participation”, September 2015.

Currently the EU allows Gazprom to use only 50% of the OPAL pipeline, due to the participation of Gazprom’s subsidiary Wingas in the pipeline.  However as you can read at the following Reuters article, titled “EU delays decision on Russian access to Opal gas pipeline”, November 2014, no other company was interested to use OPAL’s remaining 50% spare capacity. That makes sense, because only the Norwegian state owned Statoil could use it, but Statoil is already connected to Germany.

I guess that the EU insists in forbidding Gazprom to use the other 50% of OPAL’s capacity, in order to oblige Gazprom to sell more natural gas through Ukraine, because the pro-EU Ukrainian government badly needs these transit fees. But there is a lot of pressure on the EU on the issue of the Russian gas, because Russia is a very reliable supplier, the Baltic route is a very safe route, and there are many giants involved in this project. And I am not talking only about the energy firms. As you can read at the following article from Gazprom’s site, titled “Siemens to supply control tools and electrical systems for South Stream’s offshore section”, April 2014, Siemens, another German giant, would develop significant parts of the South Stream pipeline, which for the moment is cancelled.

As you can read at the following article from Gazprom’s site, titled “Gazprom and Wintershall sign Agreement on closing asset swap deal”, September 2015, Gazprom and Wintershall, which is the largest German producer of oil and natural gas, agreed on an asset swap which gave Gazprom most of Wintershall’s activities and facilities in Europe, and it gave Wintershall a stake in some Russian gas fields of Siberia. Wintershall is a subsidiary of the German BASF, which is the largest chemical company in the world. BASF has already a 10% stake in Nord Stream 1, and had a stake in South Stream too.

As you can read at the following Natural Gas Europe article, titled “Germans have a plan of protecting Gazprom’s business in Europe”, September 2015, the Germans want the control for the European antimonopolistic regulation to be passed from the European Commission to a Federal Cartel Office. According to Natural Gas Europe the Germans want that because they will have more influence in a Federal Cartel Office, and they will be able to be softer towards Russia.

The agreement for the North Stream 2 did not only upset the EU. It upset many other players too. The Prime Minister of Slovakia, Robert Fico, called the agreement a “betrayal”, and said that it will cost Ukraine and Slovakia billions of dollars, as you can read at the following Euractiv article, titled “Slovak PM calls Nord Stream expansion deal a betrayal”, September 2014.

At the following Yahoo article, titled “Ukraine PM calls second Russia-Germany pipeline anti-European”, September 2015, you can read that the pro-western Ukrainian Prime Minister Arseni Yatseniuk, called the agreement about the Nord Stream 2 “anti-European” and “anti-Ukrainian”. According to the Ukrainian PM Nord Stream 1 did increase Europe’s energy security, but Nord Stream 2 will convert this energy root to a monopoly route, and will endanger South and Eastern Europe’s energy security. Note that Ukraine earns 2-3 billion dollars in transit fees every year from the Russian gas. The larger the amount of gas sent to Europe through the Baltic Sea and Germany, the smaller the revenue for Ukraine.

The Slovaks on the other hand are carrying to Central and Western European countries the Russian gas which reaches Slovakia through Ukraine, with their national pipeline network which is called the Eustream. See the next two maps. At the second map you can see the Eustream network from the site of Eustream.

Map 2

Map Slovakia Germany

Map 3

Map Eustream Pipeline

At the following Reuters article, titled “Slovakia’s Eustream offers alternative to South Stream pipeline”, November 2014, you can read that the Slovaks were proposing the EU to construct the EASTring pipeline through Slovakia, in order to send natural gas from Western Europe through Slovakia to East and South Europe, in order to reduce Eastern and Southern Europe’s dependence on Russia.

As expected the announcement of Nord Stream 2 upset Poland and the Baltic States i.e. Lithuania, Estonia and Latvia. These countries claim that this agreement completely ignores European Unity, and they compare the German-Russian pipelines with the alliance between the Nazis and the Communists in 1939 (Molotov-Ribbentrop Pact). Actually Putin, in order to get even more on their nerves, defended the Molotov-Ribbentrop Pact, as you can read at the following Moscow Times article, titled “Putin Defends Ribbentrop-Molotov Pact in Press Conference with Merkel”, May 2015.

It is too much to compare the North Stream pipelines with the Molotov-Ribbentrop Pact, because today Germany is a perfect democracy which bans both communism and nazism. However Russia is gradually becoming similar to Hitler’s Germany, with the exception of anti-Semitism of course. Putin is collaborating with the Israelis against the Islamists who are supported by Turkey and Qatar, and has not spread anti-Semitism in Russia, and he was even the first Russian President to visit Israel.  However if anti-Semitism is not taken into account, Putin’s Russia has many similarities with Hitler’s Germany. And if there is a deeper crisis no one can guarantee that Germany will remain the democratic country she is today. Moreover if there is a war, and Germany and Russia are on the same side, they would have to annex Poland and the Baltic States in order to be able to communicate with each other, and also to have a unified front.

What is for sure though is that the economic reasoning of the Molotov-Ribbentrop Pact between the Nazis and the Communists is exactly the same with the economic reasoning of the Nord Stream Pipelines. In both cases Russia was supposed to provide Germany with raw materials, and Germany was supposed to provide Russia with manufactured goods.

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