Germany halted the Nord Stream 2 Baltic Sea gas pipeline project, designed to double the flow of Russian gas direct to Germany, on Feb. 22 after Russia formally recognized two breakaway regions in eastern Ukraine.
Europe's most divisive energy project, worth $11 billion, was finished in September, but has stood idle pending certification by Germany and the European Union.
The pipeline had been set to ease the pressure on European consumers facing record energy prices amid a wider post-pandemic cost of living crisis, and on governments that have already forked out billions to try to cushion the impact on consumers.
But on Feb. 22 the European benchmark gas price, currently the Dutch March contract was up 9.2% to 78.50 euros per megawatt hour (MWh) at 1337 GMT.
Dmitry Medvedev, Russia's former president and now deputy chairman of its Security Council, tried to rub salt in that wound.
"Welcome to the new world where Europeans will pay 2,000 euros for gas!" he said, according to the news agency RIA.
Germany obtains half its gas from Russia and had argued that Nord Stream 2 was primarily a commercial project to diversify energy supplies for Europe.
But despite the potential benefits, it had faced opposition within the European Union and from the United States on the grounds that it would increase Europe's energy dependence on Russia as well as denying transit fees to Ukraine, host to another Russian gas pipeline, and making it more vulnerable to Russian invasion.
"This a huge change for German foreign policy with massive implications for energy security and Berlin's broader position towards Moscow," Marcel Dirsus, non-resident fellow at Kiel University's Institute for Security Policy, said.
"It suggests that Germany is actually serious about imposing tough costs on Russia."
'True Leadership'
Ukrainian Foreign Minister Dmytro Kuleba tweeted his approval.
"This is a morally, politically and practically correct step in the current circumstances," he said. "True leadership means tough decisions in difficult times. Germany's move proves just that."
Chancellor Olaf Scholz said he had asked the economy ministry to make sure certification could not take place at the moment.
"The appropriate departments...will make a new assessment of the security of our supply in light of what has changed in last few days," he said.
Economy Minister Robert Habeck said Germany's gas supply was secured even without Nord Stream 2.
But he told journalists in Duesseldorf that gas prices were indeed likely to rise further in the short term.
The Russian state-owned gas giant Gazprom owns half the pipeline, and the rest is split between Shell, Austria's, France's Engie, Germany's Uniper and Wintershall DEA.
The Federal Network Agency—which regulates Germany's electricity, gas, telecommunications, post and railway sectors—suspended the certification process in November, saying Nord Stream 2 must register a legal entity in Germany.
Analysts had expected it to pick up the procedure in mid-year after the operator did as requested.
But the regulator said on Feb. 22 that the required positive assessment by the economy ministry was no longer available. The Nord Stream 2 operating company said it was waiting to be properly notified of the halt.
Recommended Reading
US Drillers Cut Oil, Gas Rigs for Fifth Week in Six, Baker Hughes Says
2024-09-20 - U.S. energy firms this week resumed cutting the number of oil and natural gas rigs after adding rigs last week.
Western Haynesville Wildcats’ Output Up as Comstock Loosens Chokes
2024-09-19 - Comstock Resources reported this summer that it is gaining a better understanding of the formations’ pressure regime and how best to produce its “Waynesville” wells.
August Well Permits Rebound in August, led by the Permian Basin
2024-09-18 - Analysis by Evercore ISI shows approved well permits in the Permian Basin, Marcellus and Eagle Ford shales and the Bakken were up month-over-month and compared to 2023.
Kolibri Global Drills First Three SCOOP Wells in Tishomingo Field
2024-09-18 - Kolibri Global Energy reported drilling the three wells in an average 14 days, beating its estimated 20-day drilling schedule.
Permian Resources Closes $820MM Bolt-on of Oxy’s Delaware Assets
2024-09-17 - The Permian Resources acquisition includes about 29,500 net acres, 9,900 net royalty acres and average production of 15,000 boe/d from Occidental Petroleum’s assets in Reeves County, Texas.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.