Nord Stream 2 is said to almost double the capacity of Nord Stream 1 already existing between Russia and Germany. This is the reason why Russia was dreaming of transporting its gas to other countries of Europe through the Nord Stream 2 pipeline. Russia produces about a third of the natural gas in Europe and accounts for about 10 percent of global oil production. Europe is heavily dependent on Russia for its gas needs and the certification block of the Nord Stream 2 project could lead to tensions in Europe’s energy markets.
What is Nord Stream 2 Project
The Nord Stream 2 gas pipeline is the second natural gas pipeline from the western part of Russia to northeastern Germany via the Baltic Sea. The Nord Stream 1 gas pipeline was commissioned in 2011. The new gas pipeline is said to have a capacity to carry 55 billion cubic meters of gas every year. The Nord Stream is a 2,1230 kilometer long pipeline. Its construction started in the year 2018 and was completed in September 2021. However, the work of sending gas from Nordstream 2 has not started as its operating license has been stuck.
Logic to deliver gas to European homes at affordable rates
Russia and Germany argued in support of the Nord Stream 2 gas pipeline, which would allow gas to reach homes in Europe at an affordable price. This project was also going to become a major source of income for Russia. Experts claim that with the help of Nord Stream 2 gas pipeline, Russia wants to bypass Ukraine and transport gas to European countries. With this, there will be no transit fee of $2 billion. The gas pipeline going to European countries passes through Ukraine itself. However, Germany has always claimed that the Nord Stream 2 gas pipeline is purely a commercial project.
What is the harm to the Europeans if the project is stopped
German Chancellor Olaf Scholz says his government is taking this step in response to Russia’s crackdown on Ukraine as Western countries are taking punitive measures against Russia in the wake of the Ukraine crisis. On Germany’s decision Dmitry Medvedev, Deputy Chairman of the Security Council of the Russian Federation, said, ‘Welcome to a brave new world where Europeans are very soon going to pay 2 euros for 1,000 cubic meters of natural gas!’
Gas prices may increase further in the short term
Based on Medvedev’s tweets, it appears that gas prices for Europe may return to crisis levels not seen since late 2021. Natural gas prices in Europe hit new records this winter, and tensions between Russia and Ukraine could pose further problems for European consumers. According to the news agency Reuters, Germany’s economy minister Robert Habeck has said that Germany’s gas supply is safe even without Nord Stream 2. However, in the short term, gas prices are likely to rise further.
Which gas companies are involved in the project
Half of the Nord Stream 2 pipeline is owned by the Russian state gas company Gazprom. The remaining half is divided between Shell, Austria’s OMV, France’s Engie, Germany’s Uniper and Wintershall DEA.