US Suddenly ‘Concerned’ About Shortages of Gas in Europe After Spending Years Fighting Nord Stream 2

Construction of the Nord Stream 2 gas pipeline wrapped up earlier this month, with German regulators now working to approve its commissioning. Once up and running, the pipeline will be able to deliver up to 55 billion cubic metres of gas per year to Western Europe. Moscow expects deliveries via Nord Stream 2 to stabilise soaring gas prices.

The United States is concerned that some European countries may run out of gas during the coming winter months and be forced to resort to rationing, Amos Hochstein, a senior advisor on energy security at the US State Department, has said.

“If we have a colder-than-average winter, my concern is that we will not be able to have enough gas to use for heating, not for power in parts of Europe,” Hochstein said, speaking to Bloomberg TV late on Monday.

“Certain countries are going to have the ability to purchase gas. It’ll cost more. But other countries – it won’t only be of recessionary value, and have economic considerations. It will also affect the ability to provide gas for heating, and in a cold winter, when you have to ration gas for heating, that is something that’s not just about geopolitical games or markets. It touches everybody’s lives,” the official added.

Hochstein blamed Moscow for the situation, suggesting that Russian supplies were “inexplicably low compared to both previous years and what they have the capacity to do.” The official urged Russia to increase the supply of gas to Europe via Ukraine – a US client state which has had hostile relations with Moscow since the 2014 coup, and which has been fighting tooth and nail to torpedo Nord Stream 2 since its inception.

Last Friday, Gazprom chief Alexei Miller said that the company estimated Europe’s gas stores to be 22.9 billion cubic metres below normal seasonal levels, and stressed that the company was ready to continue to stick to its supply obligations in full, and to increase deliveries as necessary.

Also last week, Kremlin Spokesman Dmitry Peskov told reporters that Moscow expects Nord Stream 2’s commissioning to help “balance the natural gas price parameters in Europe” amid the spike in prices by as much as 250 percent since January to as much as $950 per 1,000 cubic metres in recent futures trading.

In his comments to Bloomberg, Hochstein stressed that the US position on Nord Stream 2 has not changed, notwithstanding the July agreement between Washington and Berlin – the project’s main beneficiary, under which the US agreed to suspend sanctions for the sake of restoring transatlantic ties.

“We did not lift any sanctions. The president continues to oppose the Nord Stream 2 project as a political, geopolitical project that is intended to further the chokehold that Russia has on Europe, and to use that for their gain,” the official suggested.

What’s Happening?

Analysts have attributed the lower than expected European gas reserves to recently experienced longer-than-normal periods of cold weather and higher competition for liquefied natural gas (LNG) supplies with Asia as the world exits a recession brought on by coronavirus lockdowns. Gas storage facilities are estimated to be filled to roughly 70 percent of capacity, down from 93 percent at the same time last year.

In addition to these factors, others, including the closures of European nuclear, coal and thermal power plants, which renewable energy has not been able to replace, are expected to drive energy and power prices up further, according to a recent analysis by S&P Global Ratings.

Europe relies on Russian gas for about a third of its supplies, with German and Austrian energy companies seeing it as both cleaner and less expensive than many alternatives – particularly the LNG sourced from fracking being pushed on the Europeans by Washington.

In 2015, Gazprom, German energy giants Uniper and Wintershall, France’s Engie, Austria’s OMV, and the Anglo-Dutch Royal Dutch Shell signed an agreement on the construction of Nord Stream 2, a $10.5 billion energy infrastructure megaproject capable of delivering as much as 55 billion cubic metres per year of Russian natural gas to Europe via the bottom of the Baltic Sea. Financing for the project was secured in 2017, and construction began in 2018 after Germany – the project’s main beneficiary – granted permission for construction.

The United States and its allies, including Poland and Ukraine, have sought to torpedo the project at every step, and in 2019 –Washington threatened to sanction any companies involved in its construction. Sanctions on Nord Stream 2 were included in a bill on the US military budget in December 2019, prompting the Swiss-Dutch contractor building the pipeline to pull out of the project. In Early 2021, Congress passed additional sanctions, but these appeared to have little effect on the Russian pipelayers working to complete Nord Stream 2.

The first of the pipeline’s two lines was completed in June, with the second line finished on 6 September. Moscow and Gazprom have indicted that the project could be pumping gas by the end of the year, pending approval. However, Germany’s Federal Network Agency (BNA) regulator still needs to agree to the project’s commissioning. Last week, a BNA spokesperson told Sputnik that the regulator received all the necessary paperwork for the certification in June, with verification beginning in September, and a decision on the matter expected to be taken no later than January 2022.