Europe faces possible winter blackouts as Nord Stream 2 suspension heats up gas standoff with Russia

November 16, 2021, 11:29 AM UTC

Germany’s energy regulator suspended its certification of the highly contentious Nord Stream 2 Russia-to-Germany natural-gas pipeline on Tuesday, a move that will add to already high geopolitical tensions between Russia and the EU. European gas futures leapt 10% on the news.

The move by the Federal Network Agency (Bundesnetzagentur) also came just after the commodity trader Trafigura warned of power cuts in Europe this winter, owing to limited gas flows arriving from Russia.

“We haven’t got enough gas at the moment quite frankly,” Trafigura CEO Jeremy Weir said at a Financial Times conference. “So hence there is a real concern that…if we have a cold winter…we could have rolling blackouts in Europe.”

The Bundesnetzagentur said Tuesday that it could not certify Nord Stream 2’s eponymous, Gazprom-controlled operator as it was established not in Germany, but rather in Switzerland. “Following a thorough examination of the documentation, the Bundesnetzagentur concluded that it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organized in a legal form under German law,” the agency said.

“Our company [is undertaking] this step to ensure compliance with applicable rules and regulations,” Nord Stream 2 AG, the Switzerland-based operating company, said in an emailed statement. “We are not in the position to comment on details of the procedure, its possible duration, and impacts on the timing of the start of the pipeline operations.”

The move came just after British Prime Minister Boris Johnson warned the EU that it would have to choose between green-lighting the pipeline and “sticking up for Ukraine”—the country that stands to lose billions in transit fees if Russia starts sending gas to Europe via Nord Stream 2, rather than via Ukrainian pipelines.

Konstantin Kosachev, chair of the foreign affairs committee of the Russian parliament’s upper house, said delaying the certification was not in Europe’s interest, particularly with cold weather on the way. According to the TASS news agency, he warned that European consumers would bear the costs.

TASS also reported a prediction from Fitch natural resources and commodities chief Dmitry Marinchenko that Nord Stream 2 will now be “most probably launched by the end of the heating season in the best case.”

Ukraine and Belarus

The situation between Europe and Russia is extraordinarily fraught right now, with tensions focused on two countries that lie in between: Ukraine and Belarus.

In revenge for EU sanctions over his violent repression and election theft, Belarusian strongman Alexander Lukashenko has engineered a standoff at his country’s borders with EU member states Poland, Lithuania, and Latvia⁠. He welcomed thousands of Middle Eastern and African migrants to his country and then shepherded them to those borders, in what the EU is calling a “hybrid attack” on the bloc. Thousands remain trapped on the border, in freezing conditions.

Last week, Lukashenko threatened to block Russia-to-Europe gas flows that cross Belarus, if the EU stepped up its sanctions campaign. Horrified by the humanitarian crisis at the border, the EU and the U.S. are now planning to do exactly that. However, Lukashenko would likely need Russian permission to carry out his threat of turning off the Belarusian spigots, as Russia’s Gazprom operates them.

Meanwhile, with the world’s eyes focused on the Belarusian drama, Russia has moved 100,000 troops near its border with Ukraine, to Belarus’s south. Russia illegally annexed the Crimean Peninsula from Ukraine in 2014, and is backing militant separatists in a war that has been running in Ukraine’s eastern Donbas region since then. Western intelligence officials think there is a “high probability” that Russia will invade this winter.

As Trafigura’s Weir noted this week, Europe is already experiencing an energy crisis. This is partly due to what many see as a Russian campaign to limit supplies—with the motivation being to apply pressure over the long-awaited Nord Stream 2 certification.

Nord Stream 2 will double the capacity of an existing undersea route from Russia to Germany’s Baltic coast. Under the leadership of outgoing Chancellor Angela Merkel, Germany has pushed ahead with the project despite howls of protest from other EU countries that have been concerned about European overdependence on Russian gas, and about the possibility of Nord Stream 2 allowing Moscow to starve Ukraine of transit fees.

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