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Kremlin pushes for opening of controversial gas pipeline as European prices soar

The United States and Britain have lobbied Germany to ditch Nord Stream 2, which they see as political project designed to make Europe more dependent on Russia gas - Mikhail Metzel/TASS via Getty Images
The United States and Britain have lobbied Germany to ditch Nord Stream 2, which they see as political project designed to make Europe more dependent on Russia gas - Mikhail Metzel/TASS via Getty Images

The Kremlin has called for the controversial Nord Stream 2 pipeline to be opened up “as fast as possible” to balance soaring gas prices in Europe.

State-owned energy giant Gazprom announced last Friday the “full completion” of the contentious £8 billion pipeline, which critics say will enhance Europe's dependence on Russian gas and make it vulnerable to political bullying.

But commercial deliveries cannot begin until German and European regulators sign off on the project, which could take until Spring.

Natural gas prices in Europe and the U.K have soared to record highs as the recovery in demand from the worst of the coronavirus lockdowns collided with low levels of wind power and gas supply constraints ahead of the winter.

Britain’s energy supply crunch worsened on Wednesday when a fire knocked out a facility in Kent that stores electricity brought in from France via undersea cable.

“There is a great demand for gas, besides, it is not clear what winter will be like. In case of cold weather, then, of course, even more gas will be needed,” the Kremlin’s spokesperson Dmitry Peskov told journalists.

“Without a doubt, the fastest possible commissioning of Nord Stream 2 will significantly balance price parameters for natural gas in Europe,” he added.

Despite spare capacity available, experts say Russia has been unwilling to supply Europe with additional gas that could ease some of the demand pressure currently felt in Europe.

Gazprom faces high demand at home and from Asia for liquified natural gas.

But some analysts have suggested the Kremlin sees record gas prices as an opportunity for Gazprom to pressure its Western partners to speed up approval for the pipeline to go online.

“While Russia has been fulfilling its contractual obligations with the West, it has not been eager to capitalise on the demand and send additional gas to its European clients,” said Maria Shagina, a postdoctoral fellow at the Center for Eastern European Studies, who focuses on energy politics.

Workers at the construction site of the Nord Stream 2 gas pipeline, near the city of Kingisepp, Leningrad region, Russia, June 5, 2019 - Anton Vaganov/Reuters
Workers at the construction site of the Nord Stream 2 gas pipeline, near the city of Kingisepp, Leningrad region, Russia, June 5, 2019 - Anton Vaganov/Reuters

“They understand Nord 2 Stream still faces a lot of bureaucratic challenges and hurdles,” she added. “With such unusual demand for gas and the winter coming soon, Russia will feel like they can dictate the rules a little to Germany. This doesn’t happen very often.”

During the press call on Wednesday, Mr. Peskov said that the rise in gas prices in Europe “has nothing to do with Russia.”

Running from Russia's Baltic shore to northeastern Germany, the underwater, 745-mile pipeline follows the same route as Nord Stream 1, which was completed in 2011.

The Nord Stream 2 pipeline has divided European countries and also caused tensions between Germany and the U.S.

The United States, Britain, and central European governments including Poland and the Baltic states lobbied Germany to ditch the project, which they see as political project designed to make Europe more dependent on Russia gas and increase leverage over Ukraine by cutting it out as a transit country.

Russia and Ukraine have been locked in an undeclared war since Moscow annexed Crimea and sent troops into eastern Ukraine in 2014.

Angela Merkel, the out-going German chancellor, tried to assuage those concerns on a visit to Poland on the weekend, saying she had made clear to Vladimir Putin that Ukraine must remain a transit country for Russian gas.

She has also said Germany has agreed to impose sanctions on Russia if it tried to use Nord stream 2 as a “weapon.”

The Kremlin’s pressure campaign came as Spanish energy companies threatened to unplug nuclear power stations amid government moves to divert 2.6bn euros (£2.2bn) of their profits into reducing surging consumer bills.

Spain's Left-wing government has introduced a mechanism that will reroute power company earnings into bill reductions after the wholesale cost of electricity quadrupled in the past six months.