Nord Stream 2, to be or not to be
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The decision of the European Commission to allow the full use of the transportation capacity of the OPAL European gas pipeline to Germany and the Czech Republic could lead to the demise of the Nord Stream 2 project, to the delight of the Russians and the deep disappointment of the Ukrainians and Poles

Polish Foreign Minister Witold Waszczykowski recently stated that Russia would not need to build the Nord Stream 2 gas pipeline, thanks to the decision to exploit the entire capacity of the OPAL gas pipeline. The minister emphasized that “thanks to OPAL, the Russians will be able to use Nord Stream 1, which is not fully used, to increase flows. According to official data, the greater transit will be able to meet Gazprom’s needs‘. It is recalled that the OPAL gas pipeline connects Nord Stream to the European network toward Germany and the Czech Republic and the restrictions imposed by the EU in the third energy package allow Gazprom to use only 50% of the gas pipeline’s capacity. In October, however, on the eve of a winter that seems to be forecast to be particularly cold, the European Commission has extended Gazprom’s access to the OPAL gas pipeline by a further 40%, keeping the remaining 10% as a reserve for third-party operators, which could be increased up to the 20% threshold in case of strong demand. A necessary decision, given that winter is coming and that European resources are decreasing (from 2001 to 2014 European production fell from 235 billion cubic meters of gas to 132 billion), and Russia accounts for 40% of European supplies. 2016 still seems to be a record year for the Russians. The CEO of Gazprom, Alexey Miller, announced that on Friday November 25 (so-called “Black Friday‘) Gazprom reached an all-time new record, transporting over 600 million cubic meters of gas to Europe. From January 1 to November 28, 2016 the Russian giant supplied the Old Continent with 159.6 billion cubic meters of gas, thereby exceeding the total amount for the whole of 2015 (159.4 billion cubic meters).

Russia in search of alternative routes to Europe

It is clear that this decision of the European Commission, which has allowed the Russians to regain OPAL’s capacity (when the gas pipeline was planned, it was even considered that its entire capacity could be used for Russian gas), is unpleasing to the Poles and, especially, to the Ukrainians. The Ukrainian energy company Naftogaz has estimated that, if Gazprom’s access to the OPAL gas pipeline is to be increased, losses for Kiev could amount to between $290 million and $425 million per year. Therefore, if what Gazprom continues to maintain should happen, i.e., that by 2019, it will abandon Ukraine as a gas route to Europe, Kiev would lose billions of dollars of income from transit. This is why Ukraine is doing everything possible to block the new gas pipelines, that is, Nord Stream 2 and South Stream. And Poland is not sitting on the fence either: even before Waszczykowski, his deputy, the Head of European Foreign Affairs, Konrad Szymanski, in an article for The Financial Times, had defined the Nord Stream 2 gas pipeline project a cohesion test for the European Union. “The project, which first only appeared contradictory, now seems to be a Trojan horse, capable of destabilizing the economy and poisoning the political relations within the European Union‘, declared Szymanski. The European Commission, in his opinion, should guarantee the “most vulnerable countries of Europe to protect them from the monopoly‘. For this, he said, it would be necessary to freeze the project completely or at least to limit its impact on the European market.

Even the Head of the Committee for International Affairs in Bundestag, Norbert Roettgen, advised Angela Merkel to abandon the construction of the Nord Stream 2 gas pipeline. During an interview, Roettgen stressed that: "the federal government needs to take a step back from considering Nord Stream 2 an extraordinary deal rather than a political project", claiming that the people of Poland, the Baltic Countries and Ukraine "see this project as a threat to their security" and that the federal government needs to take this "concern" into account. However, even American Vice President Joe Biden, at the end of August, had stated that Nord Stream 2 would be "a bad deal" for the EU. In contrast, Vice President of Gazprom Alexander Medvedev believes that the failure of the project would equate to the “failure of Europe‘. “This would mean that economic needs are ignored in politics", he said.

Is the construction of the new infrastructure convenient for Europe?

Let us examine which conditions would be agreeable to Gazprom: either to fully utilize Nord Stream alone or, if required, as has been planned, to go ahead with Nord Stream 2. The Russian strategy at present, as we have noted, is to completely abandon Ukraine as a country used for the transit of gas to Europe. After the ''first gas war'', Vladimir Putin had already decided to build alternative transport routes and therefore planned South Stream. The project was first delayed, then it was relaunched against the choice for the gas pipeline to arrive at Turkey rather than Bulgaria. After further stops and starts the project was recently resumed with the idea of constructing two lines totaling 31.5 billion cubic meters (however, it must be said that only one line appears quite certain, and that is the one that terminates in Turkey). On the other hand, Nord Stream 2, as an alternative route to Ukraine, has had fewer obstacles and seems economically preferable. The Director of the Department of Analysis "Golden Hills - Capital AM", Mikhail Krylov, estimates that the transit of gas via Nord Stream 2 is expected to be between 1.5 and 3 times less than that recorded in Ukraine. Therefore, the savings on transit via Ukraine alone are estimated at $1.5-2 billion per year. In short, Russia is expected to push for the construction of at least one gas pipeline, or better yet, both. On the one hand, the development of renewable energies has partly decreased the demand for gas but, on the other hand, the development of gas transport, which is cheaper and cleaner than diesel or gasoline, the decline in domestic production and the failure of the long-promised American gas are driving Europe to declare having to ''diversify its energy sources'', while – however – continuing to buy increasingly more Russian gas.