Understanding the Basics of Nord Stream II

ACADEMIC INCUBATOR — Establishing the Nord Stream 2 pipeline is a geopolitical win for Russia. Germany’s response to Russia’s use of the pipeline for geopolitical leverage is key to European stability and security.

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Nord Stream II

What is it?

• Nord Stream II is an underwater pipeline traveling from Russia to Germany intended to transport Liquefied Natural Gas to several European countries
• The pipeline is expected to double the amount of gas that Russia can send directly to Germany
• This pipeline is in addition to the original Nord Stream pipeline that runs through Ukraine

Why is it important?

Currently, Russian imports account for around 43% of total EU gas imports. The Nord Stream II pipeline would significantly increase gas flow to Europe, doubling Russia’s annual export capacity. Aside from the economic benefits that this project grants Russia, many concerns have arisen as to the amount of leverage that the pipeline gives Russia over European energy. Fears of the use of this pipeline include the possibility of Russia withholding certain amounts of gas to influence energy security and the economy of Europe as a whole. Such strategic use of the pipeline was seen as recently as this fall as Russia slowed gas flow in a likely effort to expedite initial use of the pipeline. Furthermore, Russia may be using the pipeline to withdraw from the current gas transit route through Ukraine in order to achieve political and military goals in the country. One likely objective is to gain further control over Ukraine as the two countries have been in conflict since 2014. Circumventing the Ukraine-Russia gas transit line would allow for the loss of serious revenue from the gas transit line as well as allow further Russian military “initiatives”. Now that Nord Stream 2 is complete, Ukraine has lost all real bargaining power in hosting the original Nord Stream pipeline as Russia has sent thousands of troops to the Ukrainian border.

A Win for Russia

In addition to the economic opportunity of opening up a more direct and higher capacity pipeline to Western Europe, the use of Nord Stream II would be a huge geopolitical win for Russia because it will likely increase Russian energy influence, allow for further Russian interference and possible invasion of Ukraine, significantly increase the volume of Liquefied Natural Gas export capability, and build Russian influence on Europe in a major way. Secretary Blinken has warned that the pipeline is “a Russian geopolitical project intended to divide Europe and weaken European energy security.”

Potential dangers

• A Russian energy monopoly over the whole of Europe
• Ability for Russia to cut off gas supplies when politically or economically advantageous
• Naval presence surrounding the project in the Baltic Sea
• Further interference in Ukraine due to original nord stream pipeline becoming obsolete
• Severe economic losses and repercussions in Ukraine if they are bypassed with a new pipeline with estimates citing up to $3 billion in annual revenue

Germany’s important role

Because of Europe’s increasing reliance on Russian natural gas, Germany is given the important responsibility of determining how exactly this pipeline should be used. Germany is the largest buyer of Russian gas, making it an important player to Russia in the energy industry. Although Germany has agreed not to allow Russia to “use energy as a weapon or commit further aggressive acts against Ukraine”, it is up to Germany to decide what exactly determines the weaponization of the pipeline and what sort of use would warrant a complete shut off of the pipeline. The use of this pipeline does not only put Ukraine in a vulnerable position however, it puts the energy security of much of Western Europe in the hands of Russia

U.S. Pressure

While sanctions were an early strategy used by Trump to stall construction of the Nord Stream II pipeline, the Biden administration has since changed directions, instead opting for a deal with Germany that threatens to “impose costs” if Russia uses the pipeline to harm nearby countries. Now the question remains of how Germany will allow Russia to use the pipeline and under which regulations it will be permitted to operate. The Kremlin has in many ways been opposed to US interference, however, stating recently that the US must not put pressure on anyone over the certification of the pipeline. Additionally, the U.S. has an “understanding” with Germany that Nord Stream 2 will be shut down if Russia invades Ukraine

Recent Developments

As recently as November 16th, Germany has suspended approval regarding the pipeline following pressure from several western leaders. The German energy regulator has stated that the project will not be approved until “the operator is organized in a legal shape compliant with German law”. This includes the transfer of the pipeline company’s main assets and staffing budget to its German subsidiary

Because of the potential geopolitical leverage that Nord Stream 2 allows for Russia to have over Europe, Germany plays the most important role in securing Europe’s energy stability and security.

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Peer Reviewed by: Madison Lockett, Academic Incubator Editor, The Cipher Brief

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