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The Editorial Analysis: A whiff of trouble in the Nord Stream pipeline

 

Nord Stream pipeline: Relevance

  • GS 2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

 

Nord Stream pipeline: Context

  • Last month, Germany’s network regulator suspended the certification procedure for Nord Stream 2. It has raised questions over its possible development in the near future.

 

What is Nord Stream pipeline?

  • Nord Stream is a gas pipeline that will provide a direct supply of natural gas under the Baltic Sea from Russia to Germany, avoiding transit through Ukraine and other European countries.

 

Nord Stream pipeline: Why the controversy?

  • The Ukrainian authority has called the project a ‘dangerous geopolitical weapon’.
  • The United States and most of the European countries (except for Austria, Germany, Hungary and the Netherlands) have also opposed the proposed pipeline.
  • Opposing countries have concern that once operational, the project would render more leverage and bargaining power to Russia while dealing with Europe and its energy market.
  • Some experts are also of the view that Russia is trying to use Nord Stream 2 as a political weapon to put pressure on European security and ‘undermine the democratic resilience of European institution’.

 

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Nord Stream pipeline: Russia’s view

  • Russia claims that Nord stream 2 is purely a commercial project, which is shorter, cheaper, and economically more viable, compared to the gas transit through multiple European countries.

 

US on Nord stream pipeline

  • In 2019, Donald Trump had signed a law that imposed sanctions on any EU company that was involved in completing the Nord Stream 2 pipeline.
  • US administration also feared that the pipeline would give Russia more influence over Europe’s energy supply and reduce its own share of the lucrative European market for American liquefied natural gas (LNG).
  • Germany, apparently, opposed the ‘extraterritorial sanctions’, stating that they were able to decide their own energy policies without an ‘interference in autonomous decisions taken in Europe’.
  • In May this year, the Joe Biden administration decided to issue a national security waiver for the Nord Stream 2 AG.
  • The main reason was to restore trust and close cooperation between the U.S. and Germany.

 

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What makes Nord pipeline significant?

  • Germany has set out a plan to shut down its nuclear and coal power plants, with an objective of gradually moving towards renewable sources of energy.
  • In order to fill the supply gap and diversify the sources, the country plans to build its first LNG terminal to receive gas from Qatar, the U.S., and others.
  • Europe is facing a ‘perfect storm’ in its energy market, whereby wholesale energy prices have more than doubled in 2021, and there is a limited supply of fossil fuels altogether.
  • Russia is blamed for an intentional decrease in gas supplies to Europe, aiming to speed up the Nord Stream 2 gas pipeline by European Union (EU) market regulators.

 

Nord Stream pipeline: Way ahead

  • Some EU leaders have called for stronger actions toward the Nord Stream pipeline from Germany, some even asking for possible termination in the event of further military escalation in Ukraine by Russia. How the German chancellor responds will decide the fate of the ambitious project.

 

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