Russia's Gas Pipeline to Germany Clears Major Hurdle
October 30 2019 - 3:17PM
Dow Jones News
By Emre Peker
BRUSSELS -- Russia cleared a major hurdle in building a gas
pipeline to Germany that President Trump has fiercely opposed after
Denmark on Wednesday granted the final construction permits.
Copenhagen's authorization allows Nord Stream 2 AG, a subsidiary
of Russia's state-owned PAO Gazprom, to complete the last section
of the Baltic Sea link.
"Denmark is obliged to allow the construction of transit
pipelines," the Danish Energy Agency said, citing the United
Nations Convention on the Law of the Sea.
The decision follows Mr. Trump's repeated attacks on the
project, which is backed by European energy companies including
Royal Dutch Shell PLC. The president said the pipeline would let
the Kremlin to "totally" control Germany and be a "very bad thing
for NATO."
Denmark, a NATO ally that opposes the pipeline, over the last
three years exhausted all options to block it. Copenhagen lobbied
European Union partners to halt the project, while attempting to
delay construction by raising national-security and environmental
concerns.
Now, sanctions by Mr. Trump would be the only way to halt Nord
Stream 2.
"The Danish decision will no question add some juice to trying
to get this done sooner rather than later," said a Congressional
aide familiar with sanctions deliberations in Washington.
But chances of rapid U.S. action are slim, despite bipartisan
opposition to Nord Stream 2 since the Obama administration.
Congress empowered Mr. Trump to impose broad sanctions against
the pipeline project in 2017 with a bill aimed at punishing Russia
for its interference in elections the prior year. Despite his
repeated critiques of the pipeline and Europe's reliance on Russian
gas, however, the president hasn't used those powers.
U.S. lawmakers could force Mr. Trump's hand by appending
measures against Nord Stream 2 to the defense-spending bill. But
that must-pass legislation is stalled over Democrats' opposition to
the president's demand for funding to build a wall on the Mexican
border. A stand-alone Russia sanctions bill, meanwhile, is unlikely
to muster a veto-proof majority in Congress.
At stake is Russia's ability to bypass Eastern European transit
routes through Ukraine. Nord Stream 2 will enable Gazprom to pipe
110 billion cubic meters of gas annually to Germany -- double the
current amount and equal to roughly 60% of Moscow's annual exports
to the European Union, its biggest customer.
Russia's gas-transit agreement with Ukraine expires at the end
of the year. The ability to reach European markets directly would
strengthen Moscow's hand in ongoing negotiations with Kyiv.
This week, a fourth round of trilateral talks hosted by the EU
failed to yield results after Russia rejected the bloc's
Ukraine-backed proposals for a long-term contract aligned with
European regulations.
"Time is flying," European Commission Vice President Maros
Sefcovic, who leads the discussions for the EU, said Monday. "We
feel where solutions lie but we need a political will."
Moscow, however, isn't signaling any urgency. Russian Energy
Minister Alexander Novak said he discussed Nord Stream 2 during a
bilateral meeting with Mr. Sefcovic, reiterating that the pipeline
is a commercial project in Europe's interest.
The North Atlantic Treaty Organization and Eastern European
members of the EU have long warned against Nord Stream 2.
"Given Russia's use of energy as part of its hybrid threats
towards Ukraine, it would seem that NATO allies, many of which are
customers of Russian gas and oil, might have a lot to discuss," the
alliance's energy security analyst said.
After recognizing that it can't block Nord Stream 2, and with
pressure from countries led by Poland and Denmark, the EU revamped
its gas regulations to extend its rules to pipelines outside the
bloc.
Under the new EU regulations, Nord Stream 2 would either have to
spin off from Gazprom and grant access to other gas providers, or
receive an exemption from the German regulator to operate as a unit
of the Russian gas-exporting monopoly. Berlin has staunchly
defended the pipeline as a commercial project, actively seeking to
exclude the EU from the decision-making process.
Gazprom's subsidiary has challenged the revised EU regulations
in court and is racing to complete the pipeline by year-end.
"Nord Stream 2 is working toward the safe and compliant
completion of the project in the coming months," a spokesperson for
the Switzerland-based pipeline company said.
Write to Emre Peker at emre.peker@wsj.com
(END) Dow Jones Newswires
October 30, 2019 15:02 ET (19:02 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
PJSC Gazprom (PK) (USOTC:OGZPY)
Historical Stock Chart
From Mar 2024 to Apr 2024
PJSC Gazprom (PK) (USOTC:OGZPY)
Historical Stock Chart
From Apr 2023 to Apr 2024