What is the Russia-Europe Nord Stream 2 pipeline and how does it work?

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After Russia recognized separatist-held areas in eastern Ukraine, the German Chancellor Olaf Scholz suspended certification for Nord Stream 2 natural gaz pipeline.

Although the undersea pipe is completed, it is not yet operational. It connects Russian natural gas to Europe via Germany. As Western governments attempt to leverage Russia to stop further military moves against Russia, it has become a major target.

These are the key points to know about the pipeline

WHAT IS NORD STEAM 2?

It is a 1,230-kilometer (764-mile) long natural gas pipeline that runs under the Baltic Sea from Russia to Germany.

It would run parallel to the Nord Stream pipeline, and it would double its capacity to 110 billion cubic metres of gas per year. Gazprom is now able to send gas to Europe’s pipeline network without having to use existing pipelines that run through Ukraine or Poland.

Although the pipeline was filled with gas, it had been in waiting for approval by Germany as well as the European Commission.

HOW DOES SCHOLZ BLOCKING PIPELINES?

Germany’s utility regulator was looking into the pipeline to ensure compliance with European regulations regarding fair competition. It was during this approval process that Scholz stated Tuesday that he would suspend.

Germany was required by law to submit a report about how the pipeline would impact energy security. Scholz stated that this report was being withdrawn.

WHY IS SCHOLZ TAKING ACTION NOW

Scholz, who was elected to power in December, supported the project as finance minister for Angela Merkel’s predecessor. His Social Democratic Party also supported it. Despite the fact that Russia was assembling troops close to Ukraine’s borders, Scholz did not mention Nord Stream 2 explicitly, even though U.S. officials stated it would not proceed if Russia invaded.

Scholz said Russia would be subject to “severe sanctions” and warned that sanctions should be prepared in advance. Germany and the U.S. had reached an agreement to take action against Nord Stream 2 if Russia attacked Ukraine or used gas as a weapon.

Tuesday’s statement by the chancellor stated that Russia’s recognition of Ukraine’s independence from rebel-held territories in Ukraine was a “serious breach of international law” and it was necessary to send a clear message to Moscow that such actions will not be tolerated.

WHY DOES RUSSIA WANT A PIPELINE

Gazprom, a state-owned gas company, claims it will supply Europe with affordable natural gas and complement existing pipelines through Ukraine and Belarus.

Nord Stream 2 is an alternative to Ukraine’s aging system, which Gazprom believes needs refurbishment. It would also save Ukraine transit fees and reduce costs. This would avoid episodes such as the short 2006 and 2009 gas cuts due to price and payment disputes between Russia, Ukraine and Russia.

Gazprom’s key market is Europe, which provides revenue for the Russian government. Europe is dependent on gas to replace decommissioned coal and nuclear power plants, before other energy sources like wind and solar can be sufficiently developed.

WHY IS THE U.S. AGAINST NORTH STREAM 2?

The White House was “in close consultations with Germany” to welcome their announcement, press Secretary Jen Psaki tweeted Tuesday.

The U.S., European NATO allies like Poland and Ukraine opposed the project before the Biden administration. They claim it increases Europe’s dependence upon Russian gas and gives Russia the potential to use gas as a geopolitical tool . Europe imports the majority of its gas from Russia, with roughly 40% coming from Russia.

The U.S.-German relationship has been strained by the pipeline’s progress under Merkel. Biden lifted sanctions on the operator of the pipeline after it was nearly complete, in exchange for an agreement by Germany to take action against Russia if that country used gas as a weapon against Ukraine.

Republicans and Democrats have been long opposed to Nord Stream 2 in Congress. This rare agreement was reached by both parties.

EUROPEANS WILL BE ABLE TO WINTER FREEZE IF THE SUSPENDING NORD STEAM 2 IS ACTIVE?

No. No. This means that the pipeline would not be able to meet the heating and electricity requirements of the continent this winter due to a lack of gas.

Concerns about Russian gas dependence have been fueled by the winter shortage. Russia resisted short-term gas sales, even though it fulfilled long term contracts with European customers. It also failed to fill its underground storage in Europe.

Russian President Vladimir Putin stated that the shortage calls for the approval of Nord Stream 2 quickly, increasing concern about Russia using gas to increase its influence over Europe.

RUSSIAN GAS TO EUROPE RETALIATION: COULD RUSSIA REMOVE THIS?

Gazprom needs the European market, while Europe has a need for Russian gas. This interdependence is the reason why many believe Russia will not cut off supplies to Europe. However, Russian officials insist they don’t intend to.

The Ukraine crisis has added to the winter shortage and given European governments more reasons to find gas elsewhere, such as via liquefied natural gases (LNG), which is transported by ship from the U.S. or other countries.

, the former Russian president and deputy chair of Russia’s Security Council, tweeted his dismay at Germany’s suspension of Nord Stream 2. He said, “Welcome in the brave new world, where Europeans will very soon be paying 2,000 Euros for 1.000 cubic metres of natural gas!”

On Tuesday, the spot market gas price in Europe was 829 euro ($940) per 1,000 cubic meters. In December, it was close to $2,000 and stood at 1,743 euros. However, prices have fallen since then as Europe has secured more LNG.