Certification of Nord Stream-2 has been suspended. This is happening for the second time. This time there was a clear threat: one of the options for the development of events is a negative safety assessment that will not allow the pipeline to be certified and subsequently launched into operation.
With this move, the EU is openly politicizing the commercial gas project.
As you remember, it was the EU that constantly blamed Gazprom and Russia for this. This once again demonstrates the double standards of the West. At the same time, according to experts, even without recognition by Russia of the DPR and LPR, Europe would find a reason to delay the certification of the Nord Stream-2.
“We are always dependent on the political context of relations between Russia and the West. If the political context allows, then it is quite possible that in six months Scholz will say that relations have normalized and will give the command to continue certification. And if the political context does not allow, then Scholz will not make such a statement and Nord Stream-2 will not be able to start working,” Stanislav Mitrakhovich, an expert at the FNEB, believes.
In the first case, in weeks or months the gas pipeline will be put into operation, and they may even have time to do it by the new heating season. In the second case, Europe will have to go through another winter without Nord Stream-2 and, most likely, in conditions of super-high prices for gas.
“I don’t think it’s a good idea to cut the pipe into scrap metal. Technically, there are no problems to return to the operation of the gas pipeline. It will cost and wait for a better moment, while the Europeans have to pay a high price for gas,” says the FNEB expert.
After Scholz’s statement, prices for gas futures to Europe immediately jumped by 10%. Further, they can grow even more as sanctions are imposed by Europe and the United States. So far, the UK and the EU have clearly announced soft sanctions that apply to a number of businessmen and five Russian banks.
“If American sanctions (like European ones) are also relatively mild, then everything will remain the same. But if the Western sanctions are interpreted by the Russian leadership as tough, then I do not rule out stopping the transit of gas through Ukraine,” says Stanislav Mitrakhovich.
According to him, the contract with Ukraine allows such a measure to be implemented, because it is concluded according to the “provide the gas or pay” rule.
“This means that you can pay about $110 million a month and not pump gas through Ukraine,” the source says. In this case, the cost of gas futures may well set a new historical record.
“Europe will face a choice. It can launch Nord Stream-2, or buy expensive LNG, or limit its own production, close plants. At the same time, this will clear the minds of Ukraine in its attitude towards Russia, the DPR and the LPR,” says Mitrakhovich.
Gazprom, in this case, will try not only not to violate contractual obligations with Ukraine, but also with European buyers. In order not to be accused of failing to fulfill its obligations to Europe, it will try to deliver to the Europeans those volumes of gas that it is obliged under long-term agreements in other ways. But in this case, it is hardly worth counting on additional volumes for Europe.
How can Gazprom replace Ukrainian transit?
“The easiest option is to load the Yamal-Europe gas pipeline, which has been idle since the end of December. Secondly, it is possible to agree with Novatek on the redirection of part of its gas from Yamal to Europe. Thirdly, Gazprom can buy gas from independent international traders to fulfill its obligations. Of course, such a step will be more costly for Gazprom and Russia, but here we will already be talking about high stakes,” the expert points out. But Russia will stop transit through Ukraine only in response to the application of really tough sanctions against it by the West.