London – The West showed Tuesday it was ready to target Russia’s huge energy industry — even at the risk of hurting itself — after Moscow ordered troops into parts of eastern Ukraine.
Germany said it was halting certification of the Nord Stream 2 gas pipeline following Moscow’s actions in eastern Ukraine on Monday, the CNN Business reported from London.
“With regard to the latest developments, we need to reassess the situation also with regard to Nord Stream 2. It sounds very technocratic but it is the necessary administrative step in order to stop certification of the pipeline,” Chancellor Olaf Scholz said in Berlin.
The 750-mile pipeline was completed in September but has not yet received final certification from German regulators. Without that, natural gas cannot flow through the Baltic Sea pipeline from Russia to Germany.
The United States, the United Kingdom, Ukraine and several EU countries have opposed the pipeline since it was announced in 2015, warning the project would increase Moscow’s influence in Europe.
Nord Stream 2 could deliver 55 billion cubic meters of gas per year. That’s more than 50% of Germany’s annual consumption and could be worth as much as $15 billion to Gazprom, the Russian state owned company that controls the pipeline.
As Russia’s biggest gas customer, Germany had tried to keep Nord Stream 2 out of global politics. But Berlin found it ever harder to defend the project as its allies debated how to punish Moscow should it order an invasion of Ukraine.
Russian President Vladimir Putin’s decision to order troops into eastern Ukraine put the German government in a difficult position. US officials have made clear that they would move to suspend Nord Stream 2 in the event of a Russian invasion, without offering specifics on how that would be accomplished.
Gazprom is the sole shareholder in Nord Stream 2 but 50% of the finance was provided by five European energy companies, including Wintershall and Uniper of Germany. The other financial backers are Britain’s Shell (RDSA), Engie (EGIEY) of France and OMV (OMVJF) of Austria.
Energy is a major political issue in central and Eastern Europe, where gas supplies from Russia play an essential role in power generation and home heating. Natural gas prices have set new records this winter in Europe, and a conflict in Ukraine could bring more pain to consumers.
Russian supplies of natural gas to Europe have been running well below last year’s levels, and Moscow could decide to choke them off further in response to Western sanctions.
“A disruption of Russian gas supply is likely amid the crisis, either through pipeline damage or if Moscow decides to stop pumping,” analysts at Eurasia Group wrote on Tuesday.
“Following a scramble for shipped liquefied natural gas (LNG) imported from around the world since December, the EU probably has enough gas in its storage sites to see it to spring, when gas consumption tends to drop by a third amid warmer weather.”
