Nord Stream 2 Pipeline

• 23 Jul 2021

Why in News

Recently, the US has approved the Germany-Russia Nord Stream 2 Pipeline (NS2P) project - which significantly increases Europe’s energy dependence on Russia.

• The US had previously imposed sanctions to prevent the completion of this gas pipeline between Russia and Germany.

Key Points

• About:
  
  • This is a 1,200-km pipeline that runs from Ust-Luga in Russia to Greifswald in Germany through the Baltic Sea. It will carry 55 billion cubic metres of gas per year.
  • It was decided to build this pipeline in 2015.
  • Nord stream 1 system is already completed and together with NS2P, it will supply 110 billion cubic metre of gas a year to Germany.
• Implications:
  
  • EU’s Dependence on Russia:
    
    • It will increase Europe's dependence on Russia for Natural Gas, currently EU (European Union) countries already rely on Russia for 40% of their gas needs.
  • Bypassing Ukraine:
    
    • There is an existing pipeline between Russia and Europe through Ukraine, once the NS2P project is completed it would bypass Ukraine and deprive it of a significant transit fee of around $ 3 billion per year.
  • Geopolitical win for Russia:
    
    • It can be a generational geopolitical win for Russia and a catastrophe for the United States and its allies.
• US’ New Stand:
  
  • Softer Option to threaten Russia:
    
    • The US has gone with the softer option of threatening Russia with consequences should it use the pipeline to harm Ukraine or other countries in eastern Europe.
    • On one hand, it wants access to Russia’s hydrocarbons, but on the other distrusts Russian President Vladimir Putin, who it holds responsible for a series of affronts, such as the Crimean conflict of 2014 and the alleged interference in the US elections of 2016 and 2020.
  • Germany’s own Act against Russia:
    
    • The US-Germany deal lays out that Germany by itself will put sanctions and limit Russian exports, if 'Russia attempts to use the energy as a weapon and commit further aggressive acts against Ukraine'.
  • Green Fund for Ukraine:
    
    • Germany has to “utilise all available leverage” to extend by 10 years the current Russia-Ukraine gas transit agreement.
    • Germany also has to contribute at least $175 million to a new $1 billion “Green Fund for Ukraine” that aims at improving the country’s energy independence.

Source: IE