Merkel once again defends Nord Stream 2 / News / News agency Inforos
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Merkel once again defends Nord Stream 2

Agreement between Germany and France on EU Gas Directive amendments strengthens the legal basis of the Nord Stream 2 project

Merkel once again defends Nord Stream 2
Context:

The Russian Nord Stream 2 gas pipeline project continues to shape the political agenda of the European Union (EU).

So, February 7 saw a report by the German Sueddeutsche Zeitung that France intends to join the EU states opposing the Nord Stream 2 project. The essence of this story is that France allegedly ceased to be Germany's ally ahead of the vote to adopt amendments to the EU Gas Directive. The new features assumed an extension of Third Energy Package standards to offshore gas pipelines and might well result in particular problems to the Nord Stream 2. "Discord" between Berlin and Paris was supplemented by information on French President Emmanuel Macron's cancelled visit to the conference in Munich. The European bureaucrats must be enjoying such a scenario, let alone the White House.

However, on February 8, German Chancellor Angela Merkel announced a compromise reached within the European Union on amending the EU Gas Directive and implementing the Nord Stream 2 project. "Regarding the Gas Directive, we have reached an agreement and this was possible because Germany and France worked closely together," Merkel summed up at a press conference in Berlin.

This came amid the German Chancellor's comments on the outcome of the meeting where the EU member states' permanent representatives to the EU Council approved amendments to the gas sector regulatory document (EU Gas Directive). Which started the ball rolling as regards the process of its further revision.

As a result, the adapted Gas Directive will not flatly impede the development of Nord Stream 2. The compromise derivative of amendments will keep options open for Berlin in terms of project implementation. The substance of Germany and France's proposal is that a country in whose territory the gas delivery point from the offshore pipeline is located, will also be entitled to choose the formula for applying EU Gas Directive rules to this project and possible exceptions. When talking about Nord Stream 2, the blue-sky fuel recipient country is Germany. This is a fundamental issue. For Berlin, the Nord Stream 2 gas pipeline project is a strategic one, taking into account both the country's growing demand for gas and the reinforcement of its transit status. What's interesting, Merkel does not consider the project an indication of Germany's growing energy dependence on Russia. During her public appearances the Chancellor explains that  there is an alternative channel of energy supplies to the country being constructed in parallel. According to her, Germany is building up infrastructure in all the directions. The point at issue is the intention to get volumes of liquefied natural gas (LNG), including from the United States. As you know, several receiving terminals will be built at the expense of a solid public co-funding, with €500 million allocated by Berlin.

The EU Gas Directive provides for an extension of European standards to all the cross-border gas pipelines, but it will also offer exceptions for the existing projects. This has been revealed in a statement by the EU Council in Brussels. Now those opposing the Nord Stream 2 will find it more complicated to seek reasons for legal claims to the Gazprom project.

Meanwhile, Nord Stream 2 is being steadily constructed. According to head of the Austrian integrated oil and gas company OMV (one of Gazprom's five key project partners) Rainer Seele, about 600 km of pipe have been laid in the Baltic sea, which is nearly half of the entire underwater route. At the same time, a corporate group aided by Seele has dug out a number of tranches totaling €600 million within the framework of pipeline construction financing.

Given the project's development stage, there is little prospect that Nord Stream 2 is going to be frozen. Construction dynamics are proactive, financing is stable. The legal foundation of the project is also being strengthened. Investors believe in its success. And, of course, they will persistently offer arguments favoring the project to protect their investments.

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