The Nord Stream 2 pipeline could be an important bargaining chip in easing tensions in Ukraine, as President Vladimir Putin launches a ‘full’ Russian invasion.
The certification of the pipeline has been put on hold by German Chancellor Olaf Scholz, meaning the strategically important pipeline - finalised in construction terms but not yet functioning - cannot begin operations.
Speaking during a press conference with Irish Premier Micheal Martin, Scholz said that he had asked the German officials to halt the review process for the major gas pipeline project.
“The situation we find ourselves in today is a completely different one,” he said, adding that this would mean no certification process was now possible for the controversial energy project.
“That sounds technical, but it is the necessary administrative step so there can be no certification of the pipeline and without this certification, Nord Stream 2 cannot begin operating.”
But what exactly is the Nord Stream 2 pipeline, what role does it play in the current geopolitical tensions, and had people been criticising Nato ally Germany?
Here is everything you need to know about it.
What is the Nord Stream 2 pipeline?
Nord Stream 2 is a planned gas pipeline running from Russia to Germany across the Baltic Sea, bypassing a separate pipeline running through Ukraine and Belarus.
The pipeline has been completed in its construction, but has not yet been granted the legal requirements to begin operations.
The pipeline will run alongside the existing Nord Stream 1, and would double the pipeline’s capacity were it operational.
The Nord Stream projects have been fiercely opposed by the United States and Ukraine, as well as by other Central and Eastern European countries, because of concerns that the pipelines would increase Russia's influence in Europe.
Why is it divisive?
The pipeline is seen as much as a geopolitical tool as anything else, a way for Russia to control the gas supply to Europe, which directly affects fuel prices.
Manipulation of the pipeline could increase Europe’s dependency on Russia for energy, while straining tensions between otherwise united EU members.
Think back to the gas and energy crisis of autumn 2021, which saw rocketing prices and energy suppliers buckling under the financial strain.
Some claimed at the time that Russia had been limiting gas supplies in a bid to encourage regulators in Europe to quickly certify the Nord Stream 2 pipeline for operation.
Tory frontbencher Lord Agnew of Oulton said that spiralling energy costs were nothing to do with supply shortages, but were due to a “geopolitical move” by Russia to put pressure on Europe.
Who paid for it?
According to Gazprom, the costs of the onshore pipelines in Russia and Germany were around €6 billion (£5 billion)
The offshore section of the project cost €8.8 billion (£7.3 billion). 30% of the financing was raised through equity provided by shareholders in proportion to their stakes in the project, while 70% came from external financing by banks.
Loans from Uniper, Wintershall Dea, OMV, Engie, and Royal Dutch Shell covered 50% of the project costs of €9.5 billion (£7.9 billion), with the rest financed by Gazprom.
Why is the German decision a relief?
The German Chancellor’s decision to suspend certification on the project will come as a relief to Nato and many of its allies.
Many had questioned the country’s behaviour, accusing them of not honouring their Nato membership agreements to stand with their allies against the Russian threat; one Tory MP even went so far as to call the nation “the real bad guys” in the situation.
Speaking to Times Radio, Bob Seely said: “their complete dependence on Russian oil and gas, their willingness to have the Nord Stream 2 pipeline, which is not even needed, built, purely so that the Russians can cut off supplies to Ukraine, is incredibly self-centred and selfish.”
Germany would benefit greatly from the Russian controlled pipeline, which runs directly into the country, and it was thought that it did not want to present too strong an opposition to Russia for fear of losing vital fuel supplies.
It is often said that the Nord Stream 2 pipeline is more important to Germany than Russia, which could just as easily sell the gas to China and other Asian nations.
Downing Street has said the Prime Minister believes it is right to “snip the feed of Nord Stream from our bloodstream”.
Asked if Boris Johnson was pleased by the move, his official spokesperson said: “Yes. I mean, we’ve seen what the Germans have said on this. And I think, you know, this has been something that the Prime Minister has been calling for for some time, and indeed again this morning – that Europe has to wean itself off Russian hydrocarbons.
In January, Berlin responded to a request for arms by offering 5,000 protective helmets to Kyiv, a move that was described as a “joke” by officials.
Vitali Klitschko, the mayor of Kyiv and former world heavyweight boxing champion, said the behaviour of the German government left him “speechless”.
“The defence ministry apparently hasn’t realised that we are confronted with perfectly equipped Russian forces that can start another invasion of Ukraine at any time,” he told the newspaper Bild. “What kind of support will Germany send next, pillows?”
Ukraine’s ambassador in Berlin had urged the German government to at least help by sending 100,000 helmets and protective vests.
German defence minister Christine Lambrecht said the 5,000 sent “a very clear signal: we are on your side”.
What has Ukraine said about it?
Ukraine likely would have liked to have seen the cancellation of the pipeline, even before heightened tensions with their Russian neighbours.
That’s because the Nord Stream 2 pipeline would bypass an existing similar pipeline that runs through Ukraine.
“Ukraine currently hosts the largest existing pipeline for Russian gas and transit fees have historically made up a large proportion of their GDP,” the Prime Minister’s official spokesman said in November.
“Nord Stream 2 would divert supplies from the Ukraine that would have significant consequences for its economy.”
Vadym Prystaiko, Ukraine’s ambassador to the UK, said he would “absolutely” like Germany to cancel the Nord Stream 2 pipeline. He told Sky’s Trevor Phillips On Sunday: “That’s what we asked them so many times.”
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