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Energy Expert: Austrian Gov't Has Taken Pragmatic Stance Towards Nord Stream 2

© Sputnik / Sergey Guneev / Go to the photo bankPipes for the construction of the Nord Stream 2 pipeline
Pipes for the construction of the Nord Stream 2 pipeline - Sputnik International
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Austrian Chancellor Sebastian Kurz said after a meeting with Donald Trump that Vienna will continue supporting the Nord Stream 2 project despite the US opposition. Sputnik discussed this issue with Justin Dargin, an international energy expert.

Sputnik: How profitable is the Nord Stream 2 project for the Austrian energy security?

Justin Dargin: Fundamentally, the Austrian government has taken a pragmatic stance towards Nord Stream 2. Chancellor Kurz indicated that he was amenable to purchasing gas supplies on a cost competitive basis. Therefore, if Russian gas supplies are likely to be less expensive than other gas supplies, Russian gas would be the preferred option for Austria. Furthermore, Austria has been experiencing dynamic gas demand increases, and Russian gas, in particular has supplied this growth. Based on the fact that OMV and Gazprom have had a stable and mutually beneficial working relationship for a long period, it is exceedingly unlikely that Austria would view Russian gas as a threat rather than a viable supplier to meet its gas demand requirements.

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Sputnik: What could be the impact of Vienna's defiance to the United States opposition to the venture?

Justin Dargin: As the US Ambassador, Richard Grenell, announced to European countries last year, there is the potential for sanctions to be applied to European companies involved in Nord Stream 2. The potential for sanctions to be applied to European companies, as well as the resumption of sanctions on Iran, the Trump Administration's support of nationalistic parties in Europe and his distrust of multilateral institutions, has caused many European countries to attempt to find means to circumvent the ability of the US to apply financial and economic penalties on its companies.

That being said, President Trump and Chancellor Kurz seem to share similar political outlooks in terms of populism and immigration. Yet, despite the congruence of their personal political aims, Austria, being a small country, lacks the ability to change the strategic direction of US policy on Russian gas exports to Europe. Due to Austrian support of Nord Stream 2, if the US applied sanctions against European companies, Austrian companies would not be exempt.

Sputnik: What effect could the latest amendments to the EU gas directive have on the project?

Justin Dargin: The European Commission is mostly against the Nord Stream 2 project as it considers the project as potentially weakening security of supply by increasing reliance upon Russian gas. Additionally, the European Commission believes that by diverting Russian gas away from Ukraine, Nord Stream 2 could splinter the single market by granting Gazprom a significant degree of influence over the European gas market. It is possible that the application of the amendments would discriminate against third party projects, such as Nord Stream 2, and instead of clarifying EU rules, would create more regulatory uncertainty in the EU energy market and potentially deter future gas export projects.

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Sputnik: Washington and Poland have said they are opposed to the project as it will increase Europe's dependence on Russia. How justified is their opposition to the project? What is the main driver of their negative stance towards Nord Stream 2?

Justin Dargin: The opposition of the US and Poland towards Nord Stream 2 has several dynamics. Overall, Polish and American opposition encompasses historical, geopolitical, energy, financial and security issues.

The US and Poland feel that the development of Nord Stream 2 would grant Russia a great degree of influence in the European gas market, which in their view, could cause the EU to acquiesce more readily to what they perceive as Russian geopolitical aims. Poland, since the end of Socialism, has felt threatened by Russia, which seems to be predicated somewhat on a psychological basis. However, Poland states its opposition in terms that the development of Nord Stream 2 would disrupt European security of supply and give Gazprom unbridled monopoly power. In terms of the US, in addition to its security perspective, desires to develop a energy market relationship with the EU by the marketing of its LNG exports. If the EU were to reduce its intake of Russian gas, American companies would hope to fill the gap.

The views and opinions expressed by the speaker do not necessarily reflect those of Sputnik.

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