Germany goes ahead with gas pipeline despite U.S. protests

US President Donald Trump may loathe it, but the Russia-Germany gas pipeline Nord Stream 2 that runs under the Baltic Sea is set to be completed by the end of the year, its operators predict.

Germany goes ahead with gas pipeline despite U.S. protests
Construction on the Nord Stream 2 in Lubmin, Mecklenburg-Western Pommerania. Photo: DPA

This week the consortium led by Russian energy giant Gazprom took international media to the Baltic coast town of Lubmin where the existing Nord Stream 1 and its new parallel pipeline terminate.

“The main installations have been completed, the shut-off valves have been  installed, so we can assume that the project will be completed by the end of 2019,” said project spokesman Jens Müller.

The €11 billion project is set to double Russian gas shipments to the EU's biggest economy.

SEE ALSO: Germany reaches compromise deal over Nord Stream II

This has sparked concerns about Western Europe's increasing dependance on Russian gas, as well as Moscow being able to increase pressure on Ukraine as it is no longer as reliant on the country for transit of supplies.

Washington has bitterly opposed the project, with Trump charging in angry tweets last year that it made Germany a “captive” of President Vladimir Putin's Russia.

Chancellor Angela Merkel's government, anxious to placate Trump, has meanwhile agreed steps to boost German purchases of US liquefied natural gas.

Economy Minister Peter Altmaier, Merkel's close confidant, Wednesday said Germany would pave the way for the construction of new LNG port terminals to “boost competition between different gas imports”.

Pharaonic project 

Meanwhile, on the edge of a pine forest at Lubmin, Mecklenburg-Western Pommerania state, hundreds of workers with heavy construction equipment have been labouring at the pipeline's sandy landing site.

Other crews are busy offshore on a fleet of 20 ships to lay the 1,230 kilometre steel-and-concrete pipeline through the maritime territories of Russia, Finland, Sweden, Denmark and Germany.

The pipeline being laid out in the nearby community of Groß Polzin. Photo: DPA

The pharaonic project still faces an obstacle as Denmark has so far failed to give approval to the controversial and geopolitically sensitive pipeline.

“We have good reason to think” that the green light will be given “in the near future,” said Müller.

Since its inception, Nord Stream 2 has caused controversy.

Proponents say it will help secure Europe's gas supply at lower prices by sending an additional 55 billion cubic metres per year.

Several Eastern European countries have opposed the project which effectively bypasses them and deprives them of lucrative transit fees.

They charge that Moscow in particular aims to isolate Ukraine. 

The country has long key for the transit of Russian supplies to Western Europe, but price disputes between Moscow and Kiev have led to several disruptions of supplies to other European countries. 

Ties between Kiev and its Soviet-era master Moscow were then shredded after a popular uprising in Ukraine ousted a Kremlin-backed regime in 2014. Russia retaliated by annexing Crimea and supporting a separatist uprising in the east of the country.

Combined with the planned TurkStream pipeline across the Black Sea, Nord Stream 2 would theoretically allow Russia to bypass Ukraine in providing gas to Europe.

US sanctions threat

Merkel long insisted Nord Stream 2 is a “purely economic project” but has more recently given assurances that Ukrainian interests will be protected.

In the third quarter of 2018, pipelines through Ukraine still accounted for 48 percent of Russian gas shipments to Europe, according to the European  Commission.

The consortium insists that Ukraine will retain its role as a transit country.

Currently out of an annual total of 170 billion cubic metres of Russian gas shipped to the European Union, 93 billion cubic metres pass through Ukrainian pipelines.

“It's simple mathematics,” said Müller, pointing out that since Nord Stream 2 will be able to handle a maximum of 55 billion cubic metres per year, Ukrainian pipelines will still be needed.

A legal threat hovers over the project, which also includes Germany's Wintershall and Uniper, Dutch-British Shell, France's Engie and Austria's OMV. 

Trump's US ambassador to Germany, Richard Grenell, in January warned that companies operating in the Russian energy export pipeline sector are in danger of US sanctions.

Its proponents argue that Nord Stream 2 does not fall under a 2017 law targeting Russia, the Countering America's Adversaries Through Sanctions Act. 

Questioned by AFP about the sanctions threat, the German government pointed to the “private business” nature of Nord Stream 2, while the consortium declined to “comment on political decisions”.

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German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.