Rumours are circulating that the Nord Stream pipelines may be repaired and reactivated, with the operator of Nord Stream 2 reportedly making significant progress in pursuit of this outcome.Behind the scenes, there are heated debates about what benefit Washington can derive from reviving the pipelines.
Some analysts suggest that the gas pipeline is a contentious issue and that the US is unlikely to show sympathy towards it. However, it is possible that President Trump has recognised the potential for political gain in Brussels, and that Russia has played a role in this.
Whatever the case, it is clear that the restart of Nord Stream 2 could significantly impact the balance of power in the European energy market. The ability to resume supplies will be crucial in determining the outcome.It is widely acknowledged that the EU is reliant on Russian gas.
While some EU members are candid about their reliance on Russian gas, others are less forthright, perhaps because they see it as a negative. Some countries are finding ways to secure Russian gas at reasonable prices in order to support their national economies. Others, having used up their reserves, are purchasing LNG from overseas at high prices.In fact, both sides need pipeline gas, according to Oleg Kalmanovich, chief analyst at Neomarkets.
"The EU definitely needs it. Europe is interested in the return of at least some of the closed enterprises that moved to the US and Asia due to the high cost of energy. Europe needs cheap gas to provide jobs and reduce the level of social tension. An example is the unrest over the closure of the Audi plant in Brussels under the nose of the European Commission headquarters. Europe needs cheap gas – not spot, but long-term contracts (with Russia, for example) for political stability. The recent elections in Germany appear to support this viewpoint.
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The EU's inaction is perplexing given the growing concern among businesses of all sectors about the impact of the energy crisis on their economic viability. It is surprising that the European Union is seemingly ignoring these concerns. This apparent lack of commitment to the primary mission of safeguarding the welfare of Europe may be contributing to the efforts of individuals, including the director of Nord Stream 2 AG, Matthias Warnig, to secretly revive Russian gas supplies.
According to the Financial Times, Warnig is seeking to restart the gas pipeline, having concluded that he would not receive support from Brussels. He has approached the United States with a proposal. This is the same Warnig who previously found American investors willing to fund repairs to Nord Stream 2, albeit not free of charge.
Richard Grenell, the US President's Special Envoy for Special Assignments, is said to have visited Switzerland multiple times to advocate for Nord Stream.According to the publication, the plan is to rebuild Nord Stream 1 to supply hydrogen from Finland to Germany, a scenario that is considered "fantasy." In general, it is difficult to evaluate such plans based on vague media reports, Kalmanovich continues.
"There is a growing disinclination to acknowledge the ongoing negotiations, given the uncertainty surrounding the geopolitical implications of such agreements.Nord Streams represent significant international infrastructure projects, and it is crucial that they are not vulnerable to blackmail or used as bargaining chips by Russia.The repair and restart of gas pipelines necessitates substantial investments in the billions. It is imperative to determine who will assume financial responsibility for these risks and the costs associated with repairs and restoring the infrastructure. It is important to note that the freezing of the project was not Russia's fault," the expert emphasised.
The Pitfalls of Compromise
It is noteworthy that three of the four Nord Stream lines were destroyed in September 2022. The US did not impose sanctions on Nord Stream 1, but it did impose sanctions on Nord Stream 2. Incidentally, one line with a new Russian-made Ladoga turbine remained intact in the latter. Each of the branches of the pipelines has a capacity of 27 billion cubic metres of gas, and it is likely that this will be a key point in any discussions on lifting sanctions.Nord Stream 1 has significant issues with turbines manufactured in Canada, which are also supposed to be serviced there under the supervision of Siemens. However, sanctions have been imposed on the equipment. In order to restore the pipeline's integrity, the status of the turbines must be clarified: whether they are subject to sanctions or not. If they are, it will be necessary to replace them with others.
These aggravating circumstances are only the tip of the iceberg. Nevertheless, when assessing the positions of the Russian Federation, the USA and the EU in relation to Nord Stream, it is important to consider compromise solutions that would allow each party to gain something, as Alexey Bychkov, Director of the Faculty of State and Municipal Policy at Synergy University, admits.
"One potential US objective could be to acquire Nord Stream, ensuring its completion and facilitating the transfer of gas to Germany and other Northern European countries. This could be a strategic move to gain control of the asset.Alternatively, the US may seek to exert pressure on Germany or Brussels through bargaining, offering either Nord Stream or LNG from the US to influence trade and energy processes in the EU. A third option could be an attempt to improve relations with Russia, but the ultimate goal will still be to exert pressure on the EU."The political scientist concludes that the US and Russia are working together to control the EU, using energy resources to exert pressure on the European economy.
Regardless of the evolving circumstances, it is evident that the Nord Streams are evolving from frozen projects into a bargaining chip for Russia.As Bychkov notes, a pivotal moment is imminent, where Russia, with the support of its US and European partners, will be well-positioned to advance its interests.A notable example of this is the potential for Russia to provide gas supplies on favourable terms to allies like Hungary, Slovakia, and Serbia, while imposing stricter terms on non-allies. In the new geopolitical landscape, it will be challenging to deceive Russia.
"While the US and EU previously exerted pressure, Russia now has the opportunity to restart Nord Stream 2 and strengthen partnerships with several Northern European countries, offering affordable gas. This will also assist the US in regaining political influence," the expert concluded.
To summarise, there are prerequisites for the revival of Nord Streams, even if one of them will supply "green" hydrogen instead of gas. Regardless of how much anyone would like it, the interests of many participating states converge here, with each state pursuing its own national interest.