Russia to use Nord Stream 2 at home as Europe shuns its gas

Nord Stream 2 construction Source: Nord Stream

Gazprom PJSC will use part of its Nord Stream 2 gas pipeline infrastructure to serve clients at home after the contentious supply link with Germany was put on hold amid Russia’s invasion of Ukraine. 

The gas producer plans to put the project’s onshore facilities in Russia to work in expanding supplies to customers in the northwest of the country, it said in a statement.

Gazprom’s plan comes as Europe doubles down on efforts to wean itself off Russian supplies, which last year accounted for roughly 40 per cent of all gas consumed on the continent. Europe’s opposition to Nord Stream 2 was underscored Thursday when Germany, the single-largest consumer of Russian pipeline gas, chartered four floating terminals to import liquefied natural gas.

The continent’s urgency in reducing dependence on Russian deliveries was heightened last week when Russia cut off pipeline-gas shipments to Poland and Bulgaria, which refused to comply with the Kremlin’s demand for payment in rubles. The European Union has said such payments breach sanctions, but several countries are yet to decide whether they can find a way to avoid getting cut off.

Gazprom’s new use of Nord Stream 2 means only one of the project’s twin pipelines would be immediately available for supplies to the EU if the bloc decides to eventually approve the link, according to the statement. Deliveries via the second leg can only start after 2028. 

Nord Stream 2, set to carry as much as 55 billion cubic meters of Russian gas per year to Germany across the Baltic Sea, was ready to start full-scale deliveries in December despite U.S. sanctions. Approval from the German energy regulator and EU officials were the last hurdles for the project. 

However, Germany reversed its support for the pipeline in February after Russia recognized two separatist regions of Ukraine as sovereign states. German Chancellor Olaf Scholz asked the Economy Ministry to withdraw its assessment that the Russian project didn’t pose a threat to security of energy supply. 

Germany’s move prompted White House Press Secretary Jen Psaki to describe Nord Stream 2 as “currently dead at the bottom of the sea.”

© 2022 Bloomberg L.P.

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