Nordstream 2 Pipeline Fun and Games
The very late-in-the-day sanctions placed on the Nordstream 2 [NS2] pipeline project imposed at the end of 2019 by the Trump administration may primarily have been an attempt to sell more US LNG into Europe and once again make America look bad. The Kremlin and Gazprom may not be overly bothered about a 1 year delay, if they can kick up enough stink. The bigger picture involves completing NS2 to pair up with NS1, providing 110 Bcm, one quarter of European predicted 2024/2025 consumption of roughly 400–450 Bcm. The completed NS 1/2 will simply be one part of a larger RU-Iran-Qatar-Turkey gas cartel aimed at possible domination of European long-term gas supply, exacerbated by eventually increasing the Natural Gas price as and when decided: [Ref. 1].
The NS2 project is not in reality a wholly “German” project, in view of the developing consortium and myriad of different companies involved in construction. It is a wholly controlled Gazprom/Kremlin project supplying many European countries. By far the best comprehensive NS2 Background is from Clean Energy Wire [Ref. 2].
The Russian pipeline and LNG developments, the tie-ins to Qatar and Iranian gas and the future European gas supply situation can really only be fully appreciated if one accepts two things:
a) The West is in a vicious hybrid war, effectively initiated by President Obama’s right-or-wrong decision in 2012 with the Magnitsky Act to signal the taking on of organised crime, centred on Russia. This led to a ramping up of activities in 2014, inc. Crimea & Ukraine and other measures, active and cyber. Ongoing, effective and still very nasty.
b) The July 2018 Helsinki Summit farce [Ref. 3] signalled by the, on the face of it at the time, odd inclusion of a pipeline project at the top of a major agenda, but with world’s eyes on the show, indicated that Ukrainian gas, the removal of UKR gas tariffs by isolation and the eventual use of the NS2 sanctions was a means to drive a fat wedge between US and NATO/Europe.
There appear to have been a number of aims in the NS2 sanctions game-playing, so strangely placed to the fore at the July 2018 Helsinki meeting between Vladimir Putin and his Trump friend and ally:
1. Damage US-European relationships, isolate Germany by painting it as grasping and working against whole-Europe interests.
2. Harm several large European contractor and sub-contractor companies (about 100).
3. Divide Europe and cause very bad feeling against US with some, especially in Germany.
4. Distract by being a major “look here” from other more important matters, such as the UAE-Israel-KSR coming together.
5. Fuel resentment and pro-Gazprom attitudes with members of Gazprom led consortium, UNIPER, Shell (NL), OMV (AUS), Wintershall (D) and ENGIE (F).
6. Proceed according to plan, after letter from 3 Trumpite Senators, Cotton, Cruz and Johnson to Sassnitz/Mukran port sparked frenzy on 5th August [Ref. 4].
7. Push to get some LNG sales into Poland for Texan buddies in US shale gas industry, using Perry, Cruz and other dealers inc. Pompeo. Bonus [Ref. 11]
Some of the biggest bullshit you will ever read in your life on this subject came out of the mouths of those three GOP gentlemen [Ref. 4]. Need one say more and indeed very well played all around [Ref. 11]. Plenty of MAGA supporters jumping at the little doggy whistles.
One final item of amusement was Guy Chazan writing in the Financial Times: “A group of US senators from across the political divide are pushing to extend those sanctions” and “Many in Berlin believe that Washington’s main motivation in opposing Nord Stream 2 is to sell Germany more American LNG”. I find it hard to believe that either Ed Crooks and Pilitta Clark would never have written that [Ref.5]. Berlin based ex Moscow WSJ man [Ref. 6]: ”Und jetzt ist alles klar genug“. Good show Rupert. Now we see you. Just what and how deep is the China hold on you Dirty Digger?
Those two “Billion Euro Bribe” LNG terminals at VOPAK Brunsbuetell and TITAN Wilhelmshaven mentioned have been under discussion for decades, as have several other LNG terminals in other countries [Ref. 8]. If it were Milford Haven and Canvey Island in UK, the ranting anti-German pro-Trump brigades in London and self-interested oil boys in Texas would be tooting different tunes. Conferences and offers of government investment are how large deals in Oil & Gas get done sometimes to move certain agendas along on energy, engaged to move things along, hence the Berlin Conf. in early 2019 when Dan Brouillette and a large US sales and marketing contingent came over to push US LNG. Brunsbuettel and Wilhelmshaven are only 8–10 Bcm each, if and ever built. In the context of that predicted European 400–450 Bcm pa this is all about Gazprom watching Rick Perry doing US LNG sales talk. Mr. Brouillette was the shale gas man put in place to do that job with Perry et al. and is now Trump’s Sec. Energy. Three to four hundred LNG vessels a year crossing the Atlantic from Cheniere Sabine Pass LNG terminal and points west? [Ref. 9] No I do not really think so.
The way things are heading, Qatar will be able to supply Europe’s capacity gap mid 20s easily as well as supplying SE Asia and we know who Qatar’s friends are these days, in addition to their little back doors into Tehran. “Importing gas from beyond Russia’s sphere of influence will be difficult. The equivalent of the Nord Stream 2 full capacity of 55 Bcm pa would require about 8 to 12 LNG vessel trips per week and competition is fierce. Qatar lifted a 2005 moratorium on further LNG developments in April 2017. Major announcements in 2019 indicate the North Field Expansion (NFE) project will expand production from 105 to 170 Bcm annually by 2024, with plans in place for new jack-up drilling rigs, four new LNG trains, and a shipbuilding campaign to deliver 60 new LNG carriers, which suggests most of the expanded production is destined for Southeast Asia. Future strategic supplies from developing offshore fields in the eastern Mediterranean may supply Europe, but Turkmeni gas is likely to go east to markets in Pakistan, India, and China” [Ref. 10].
This is almost certainly all game-playing by Gazprom/Kremlin with the Navalny poisoning wrapped around. It is designed to cause chaos and splits. Tactically these are very, very smart players backed by the Chinese. People who play along with the story are, well, playing along with it [Ref. 7.]
Potential Russian domination of pipeline gas supplies into Europe in 2025 is a dangerous slowly developing situation which requires a massive switch to clean energy away from gas as the Dutch are doing. To hell with all that “gas as a bridging fuel” PR stuff from the desperate fossil-fuellers. From a purely gas market viewpoint, cancelling NS2 makes no sense.
When President Putin tossed his friend the soccer ball in Helsinki in July 2018 “the ball is in your court now”, it was the start [Ref. 3] By January 2019 the first noises were made about US sanctions to set that ball rolling. A few weeks later Deputy Energy Secretary Brouillette was in Berlin in February with his LNG team. Nice work from Mr. Perry and friends and who cares if it’s Gazprom’s agenda if there is a buck to be made. Right now this is all just more distracting Siberian hot air.
In mid-September the Ivan Sidorenko departed St Petersburg for the German port of Mukran, where pipes for Nord Stream 2 are stored. It will supply pipes to allow another Russian ship, the Akademik Cherskiy, to finish laying the remaining 150 km of NS2 (~10%). The previously existing extension to the Greifswald terminal will be primed and ready [Ref. 11].
References
1. Affiliate Network (2019), “Mind the Gap: Geo-Strategy of Natural Gas”, 11th December 2019.
affiliate-network.co/2019/12/strategy-of-natural-gas/
2. Clean Energy Wire (2020), “Gas Pipeline Nord Stream 2 Links Germany to Russia, but Splits Europe”, 7th September 2020.
www.cleanenergywire.org/factsheets/gas-pipeline-nord-stream-2-links-germany-russia-splits-europe
3. You Tube (2018), “Putin to Trump: ‘Now the Ball is in your Court’”, 16th July 2018.
www.youtube.com/watch?v=7hUo0fPv_ek]
4. Clean Energy Wire (2020), “Outrage in Germany as US Senators Threaten “Crushing” Sanctions on Port over Nord Stream 2”, 7th August 2020.
5. Financial Times (2020), “Germany Offered €1bn for Gas Terminals in Exchange for US Lifting NS2 Sanctions”, 16th September 2020.
www.ft.com/content/3d028b63-31da-450e-ae73-13b25ecd0032
6. Financial Times: Guy Chazan. Berlin Bureau Chief.
7. Oil Price (2020), “U.S. Sanctions On Nord Stream 2 Upset European Lawmakers”, 14th August 2020.
8. S&P Global Platts (2019), “German LNG Projects are Taking Shape, but Does the Market Need Them?”, 23rd July 2019.
blogs.platts.com/2019/07/23/german-lng-does-market-need-them/
9. Cheniere. Sabine Pass Liqufaction LNG Terminal.
www.cheniere.com/where-we-work/sabine-pass
10. Gallowglaich (2020), “European Natural Gas — Renewables Balance: Geostrategic Imperative”, 31st January 2020.
11. Pipeline and Gas Journal (2020), “Russian Ship Sails for Nord Stream 2 Supply Base in Germany”, 16th September 2020.
pgjonline.com/news/2020/09-september/russian-ship-sails-for-nord-stream-2-supply-base-in-germany
