Nord Stream 2 Won’t Solve Germany’s Energy Crisis

Over the course of the current illegal war in Ukraine, Russia has gradually reduced its gas delivery to Germany via the Nord Stream 1 pipeline — in recent weeks to as little as one fifth of its potential capacity. There have already been two separate instances in which deliveries were cut off for multiple days at a time. Finally, it shut down the pipeline completely in early September.

Gazprom has claimed this was done to repair turbine damage and for routine maintenance. These service disruptions have prompted some German politicians to demand for the completed sister pipeline Nord Stream 2, which is already filled with gas, to be given the green light and be fed into to the German grid near Greifswald. Craftsmen from Halle and the Saalekreis district wrote an open letter to German chancellor Olaf Scholz and the Free Democrat (FDP) politician Wolfgang Kubicki with similar demands.

Technical Problems Are a Pretext

There is much to suggest that Russia is either faking the technical problems or using them as a pretext to exert political and economic pressure on the West, in a move to force an easing of technology embargoes. For example, six large and two smaller compressor turbines are still operating in Vyborg, close to St. Petersburg, where the Nord Stream 1 pipeline begins. This information was shared by Meist, the Italian gas and steam turbine service provider that has serviced the Vyborg station in the past.

At the end of July, Putin justified limiting the output to 20 percent by referring to an outage in three turbines that allegedly resulted from a lack of maintenance. Even if these three turbines really had been out of operation, and even if, contrary to what was reported by Meist, only five turbines had been installed in the first place, as Moscow has recently claimed, this would still not explain an 80-percent drop in output. None of the justifications provided so far have convinced experts, such those at Siemens Energy who work in pipeline technology supply. Russia’s ultimately unpredictable statements on the state of the facilities should, therefore, be viewed with scepticism.   

In addition to this Baltic Sea pipeline and the Jamal pipeline (which passes through Belarus), blocked by Poland, there is a third, underutilized route from Russia to Germany and further into Western Europe. This route travels through the Ukrainian pipeline system UGTS (and is therefore often called Ukraine Transit) and then transfers to the Transgas pipeline, which runs through Slovakia and the Czech Republic, and finally arrives in southern Germany.

However, Russia is not making use of the potential capacities of this route to compensate for the reduced supply to Nord Stream 1, supposedly cut short for technical reasons (an 80-percent reduction in the pipeline’s operations would deliver around 960 million cubic metres per week). Currently, the Ukraine Transit is only delivering 278 million cubic metres westwards per week. According to experts, this figure could be increased to at least two or three times its current volume, even after subtracting a quarter of its capacity, which was lost when Ukraine closed down a section of the line in May after losing control of some facilities in the Russian-occupied eastern Luhansk region.

Sergiy Makogon, CEO of the Ukrainian transmission system operator GTSOU, recently made it clear that his company could offer extensive and reliable supply to the EU if Nord Stream 1 is not able to deliver. The call to open Nord Stream 2 as a solution to the delivery issues is, therefore, absurd and plays into Vladimir Putin’s hands. Russia will use its power as a supplier to its own advantage in geopolitical conflicts however long as it has this bargaining power.

Bargaining with Gas Supplies

The war in Ukraine is not the first time Russia has used Nord Stream for political ends. Gazprom restricted its supply to the EU last autumn through the corridors that run through Ukraine and Poland. Up until the invasion of Ukraine, Russia had fulfilled all its long-term supply contracts, but hardly offered anything on the short-term spot market, which is where European importers traditionally stock up for part of their short-term seasonal needs.

Gazprom intended to pressure both the pending certifications of Nord Stream 2 as well as the decision on whether the state-owned company would be required to adhere to EU regulations (which demand a separation of network and operations). Kremlin spokesman Dmitry Peskov and Deputy Prime Minister Alexander Novak have repeatedly suggested that Russia would increase the supply available to the market if the commissioning of Nord Stream 2 was sped up.

Compared to the first half of October 2020, the supplies of gas that flowed through Ukraine and Poland in the first half of October 2021 were 51 and 59 percent lower respectively, and the Jamal route was almost empty. Moreover, towards the end of October last year, the gas storage facilities in Germany serviced by Gazprom were operating at only 21 percent of their full capacity, far below average compared to other similar facilities.

Today, these moves must be understood as preparations for the war in Ukraine.

Nord Stream 2 in the Geostrategic Conflict

A consortium led by the Russian corporation Gazprom, which included German partners, began construction on the Nord Stream 2 Baltic Sea pipeline in 2011. The United States strongly opposed the project from the start, a stance obviously rooted in the protection of its economic and geostrategic interests. On the one hand, a race with Moscow for sales on the shrinking gas market began, with Trump devising an entire plan aimed at boosting sales for dirty LNG (liquefied natural gas) fracking gas. On the other hand, it was motivated by power and politics — to gain the upper hand against Russia.

Many political camps in Europe and especially Eastern European EU member-states opposed this second pipeline route through the Baltic Sea, since the additional 55 billion cubic meters of annual capacity it promised to deliver would make it possible to bypass the Ukraine Transit pipeline entirely.

But Kyiv losing out on transit fees was not the only downside to the project — it also set the stage for Russia to take a tougher stance towards Ukraine and other former Soviet states. These fears became a reality not only with the occupation of Crimea and the Donbas in 2014, but also with the invasion of the rest of Ukraine in February this year.

Nord Stream 2 Was Superfluous from the Start

The new pipeline also provoked uproar from several environmental organizations, who raised concerns about energy and climate policy. These organizations opposed Nord Stream 2 for the same reasons they opposed the construction of additional LNG infrastructure in Europe: according to scientific models based on targets agreed in the Paris Climate Agreement, the existing gas infrastructure in Europe would be more than sufficient to cover the demand for gas, which was hypothetically set to decline in accordance with the Paris Agreement.

A study from Artelys and Climact commissioned by the consortium Energy Union Choices in 2016 concluded that the current gas infrastructure is sufficient to ensure the security of gas supply in Europe. The only exceptions are made for individual project proposals in South-Eastern Europe, which are intended to secure the region in the event of a significant disruption to the supply in the event of a Russia-Ukraine conflict. Major projects such as Nord Stream 2, the Southern Gas Corridor, as well as several smaller projects that were considered to be of “common interest” to the EU, many of which qualified for EU funding, were at risk of becoming bad investments.

A comparable sustainability model used in The International Energy Agency’s (IEA) World Energy Outlook 2017 also predicted that the demand for gas in Europe would decline at a faster rate than the drop in intra-European production.

Betting on the Failure of the Paris Agreement

In 2018, an energy analysis conducted by the German Institute for Economic Research (DIW) came to the conclusion that the planned second Nord Stream 2 natural gas pipeline was not necessary to secure natural gas supplies in Germany and Europe. It claimed that on the one hand, the demand for natural gas is expected to continue declining both in Germany and in Europe, since natural gas is no longer considered to be a bridging technology in the energy transition, as well as being inferior to cheaper coal in the short term and to renewable energies in combination with storage technologies in the long term. On the other hand, today there are a number of different sources for the supply of natural gas and these can be supplemented by additional liquefied natural gas (LNG) supplies in an emergency scenario.

The DIW used an extreme situation to model the LNG option (which has now occurred), namely the complete loss of Russian supplies, and not a scenario in which LNG would become necessary as an alternative to the Nord Stream 2.

A discussion featuring experts on the topic was held by the parliamentary group of Die Linke on 8 April 2019, and reached a similar conclusion. The final question asked whether Germany would need LNG fracking gas or Nord Stream 2 in order to maintain its necessary level of supply, to which all the invited experts answered: no, or only if the climate targets were missed. The new LNG terminals and the Nord Stream 2 are essentially a bet on the failure of the Paris Agreement.

The war in Ukraine war and the resulting gas crisis have of course created a much different situation than the scenarios mentioned in the studies. One major outcome of the war is that Europe is rapidly diversifying its sources of supply in order to greatly reduce gas purchases from Russia. Here, too, there is much that must be called into question, such as the plans to expand LNG supply in Germany. But one thing should be clear: Nord Stream 2 is more superfluous than ever.