Nord Stream 2 suspension deals yet another blow to supply hopes
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Gas prices rise as Nord Stream 2 suspension deals yet another blow to supply hopes

By Market Line 17 Nov 2021 (Last Updated November 17th, 2021 15:06)

Germany has suspended certifying the Nord Stream 2 gas pipeline, which adds further pressure due to supply issues and geopolitical considerations.

Germany suspends approval of controversial project despite the gas crisis in the continent

The network regulator suspended the certification process of the Nord Stream 2 operator until it transfers the relevant assets and staff to its German subsidiary. This causes a further delay that would make it almost impossible for the project to be up and running in the first half of 2022.

Gas supply has been a recurrent topic of conversation in the last couple of months as European domestic reserves are completely drained, leading to gas prices going through the roof. The bad news of the Nord Stream 2 approval suspension caused a fresh 11% leap in European gas prices.

More extreme temperatures caused by climate change have led to both an increase in energy consumption and a drop in renewable energy generation capacity from wind, which accounts for over 50% of the renewable energy generated in Europe.

The Nord Stream 2 pipeline would substantially alleviate the gas supply crisis by doubling Germany’s gas import capacity straight from Russian deposits, bypassing eastern countries. However, the project has raised a few eyebrows among some fellow EU members and the US, as it would grant Russia a stronger hold over the EU energy supply.

In fact, while Europe has struggled to meet its energy demand in recent weeks, Russia slowed the delivery of piped natural gas into the continent. This has been interpreted by several EU authorities as Putin’s power play to strong-arm the EU into approving the kickstart of the Nord Stream 2.

Reliance on Russian supply is widely seen as troubling for EU economic independence

The Nord Stream 2 project has encountered resistance in regards to its harming economic impact on fellow EU members. In fact, the US has already imposed sanctions on entities involved in Nord Stream 2, as it has been argued to have been used by Russia to asphyxiate Ukraine economically amid territorial disputes.

Overall, the Western economic forces are deeply worried about Russia interference in the EU economy. Although those worries are well justified by past Russian attempts to destabilize its rivals, Putin’s hold over the EU power supply is already strong regardless of Nord Stream 2 project.

Geopolitical instability in Eastern Europe exacerbates uncertainty over shortages

Recent developments on the Poland-Belarus border are adding fuel to the fire, paradoxically, in the speculation surrounding gas supply. Apart from driving immigrants into the EU through the Polish border, Belarus has threatened the EU with halting gas supplies if sanctions aren’t lifted.

Although there is no direct indication that Russia is a partner in the Belarus ultimatum, it works in favour of Putin’s plans to force the approval of Nord Stream 2. In the end, this scuffle sends the message that bypassing Eastern countries would ensure a more stable gas supply for the old continent.

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