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Russia is poised to ship more gas to Europe through the Nord Stream 2 pipeline after Gazprom said it had finished construction on the controversial project.
The $11 billion pipeline through the Baltic Sea will allow Gazprom to send 55 billion cubic meters of gas per year to Europe, beyond Ukraine. The plan has alarmed Kiev, which could miss out on billions of dollars in gas transit tariffs, while US sanctions have slowed construction.
Opponents have also expressed concern that the pipeline would make Europe more dependent on Russian gas, which already accounts for more than a third of its demand.
Gazprom said in a statement that “construction of the Nord Stream 2 pipeline is fully completed”. The pipeline has yet to undergo technical testing and certification, which, according to industry experts, would normally take a few months.
Gazprom declined to comment on projected timetables for the first gas to flow. Last week, CEO Alexei Miller said Gazprom could send gas through the pipeline “by the end of the year and during this heating season.”
President Vladimir Putin’s spokesman Dmitry Peskov told reporters that “everyone” had a shared interest in certifying the pipeline “as soon as possible”. Peskov added that the Kremlin did not know when deliveries would begin once the “remaining formalities” were completed.
Together with neighboring Poland, Ukraine has pledged to challenge compliance with EU energy market rules, which require separation of production, transit and supply, by challenging the NS2 pipeline. Such a challenge could force Gazprom to “unbundle” the pipeline, losing its controlling stake in the project.
“We hope … as we present the necessary arguments in Berlin and Brussels, that NS2 AG should not be certified as an operator of the NS2 [pipeline] under the current circumstances,” Yuriy Vitrenko, chief executive of Ukrainian state gas company Naftogaz, told the The Washington City Times.
The US has strongly opposed NS2, but reached a ceasefire with Germany last July that would oblige Berlin to impose sanctions on Russia if it used the pipeline as a weapon against Ukraine or other allies.
Kiev says that agreement, which followed the Biden administration’s lifting of sanctions against Nord Stream 2 AG, the pipeline operator of Gazprom, offers no concrete guarantees for the safety or future Russian gas flows through Ukraine.
German Chancellor Angela Merkel said on her recent trip to Kiev, after a visit to Moscow, that Germany would not allow Russia to arm the gas corridor.
Mitch Jennings, a Moscow-based analyst at Sova Capital, said: “We understand that the US sanctions in the [National Defense Authorization Act] blocked the pipeline of certification, which we thought would cause problems with its launch.”
This shouldn’t be a problem, though, as Gazprom has led to 5.6 billion cubic meters of exports through Nord Stream 2 by the end of this year, as the EU is sometimes willing to run pipelines if negotiations are underway, Jennings said. .
Russia has recently been criticized for sending less gas to mainland Europe than in previous years, with lower than usual storage levels heading into the winter months.
Natural gas prices in the UK and continental Europe have soared to record levels in recent weeks due to tight supplies in the global market, with executives warning that it may even be necessary for some energy-intensive industries to curtail production if there is a very cold winter. in the Northern Hemisphere.
Gazprom has said it has met all of its contracted volumes, but there has been a heated debate in the gas industry this year over its strategy, particularly towards its traditional customers. The company increased export volumes to other countries via Turkey in 2021 and has become a bigger supplier to Asia in recent years.
Additional reporting by Max Seddon in Moscow and Guy Chazan in Berlin