Austrian PM 'Challenging US for the Sake of Energy Security' - Economist

Austria will continue supporting the Nord Stream 2 project despite the US opposition to it. This is what Austrian Chancellor Sebastian Kurz said in an interview with the Austrian broadcaster ORF after a meeting with US President Donald Trump at the White House.

Sputnik has discussed this with Dr Mamdouh Salameh, international oil economist, visiting professor of energy economics at ESCP Europe business school, London.

Sputnik: How crucial is the Russian-led Nord Stream 2 project for Austria's energy security now?

Dr Mamdouh Salameh: It is very crucial. As you know Austria derives 14% of its gas needs from domestic production. Some of its needs come also from the European or the EU production as well, but the bulk of their needs come from Russian supplies and Nord Stream 1 and 2, when it is completed by the end of the year, it will add 55 billion m³ of additional gas to the European Union from which Austria benefits a lot.

If I quote the words of the Austrian Chancellor Sebastian Kurz, he said: "Austria is interested in reliable energy supplies and will continue promoting the Nord Stream 2 natural gas pipeline project despite the negative stance of the United States on the issue". He's challenging the United States for the sake of energy security of Austria.

Sputnik: I think the interesting point for this is that your normal German residents and I think there was a survey actually that 86% of Germans were in favour of the Nord Stream 2 gas pipeline not only has it created 30,000 jobs in Europe but it's also going to see significant cheaper gas supplies coming from Russia. The average man in the street is not really interested in this geopolitical warfare that we're going through globally that we've seen in the last the 3-4 years and the last two administrations. They're more interested in jobs, they're more interested in saving money and getting cheaper gas. It's a no brainer, how positive is the overall impact of the pipeline construction in real terms?

Dr Mamdouh Salameh: The Nord Stream 2 is very vital not only for Germany's needs but also for the European Union. It will provide uninterrupted cheap piped Russian gas supplies to Germany and from there to the European Union.

READ MORE: Chancellor Kurz: Austria to Continue Nord Stream 2 Support Amid Opposition by US

And Germany, in particular, needs more gas supplies in the coming years particularly with its diversification away from nuclear energy and from coal. So they will be needing a lot of supplies and the same logic applies to the growing gas market in the European Union. So I think the opposition by a few countries like Poland and Latvia and the Baltic States is not justified, and I think it is instigated by the United States.

Sputnik: Now Germany's Energy Minister Peter Altmaier has recently said that Germany has no interest in sanctions against Russia. How much does it raise then the hope of normalisation of the ties between Russia and Germany, for example. We're living in sanctionised environment, we've had five years of sanctions against Russia. Do you think that this Nord Stream 2 gas pipeline could be the vehicle that finally gets the sanctions to be ceased from Europe. What's your feeling about it?

Dr Mamdouh Salameh: Well, I will answer it in two ways. European sanctions including German sanctions on Russia are only in support of American sanctions. The Europeans have no interest in sanctions against Russia, particularly, Germany who depends for more than 60% of its oil needs and 35% to 40% of gas needs on Russia. So there's no justification for the sanctions. Furthermore, the US sanctions on Russia, and they're thinking of adding more sanctions, haven't worked.

Since 2014, when the sanctions were imposed on Russia after the annexation of Crimea, which is part of Russia, the sanctions tried to destroy the Russian economy and affect any energy project. Nevertheless, Russia has emerged stronger from the sanctions. Russia is now the world's energy superpower, its economy has grown 2.3% last year, the diversification programme since the imposition of the first US sanctions in 2014 has enabled Russia to reduce its budget dependence on oil and gas imports [exports]  from 60% in 2014 to under 40% last year.

READ MORE: US Intervention in Nord Stream 2 Will 'Skew' Market, Hurt Investment — Journo

The Russian economy can now live with an oil price of $40 a barrel or less. Nord Stream and the TurkStream are unstoppable, and they will enhance the Russian presence in the European gas market.     

The views expressed in this article are solely those of Dr Mamdouh Salameh and do not necessarily reflect the official position of Sputnik.