Nord Stream 2 wants to unclog EU-Russia energy pipe dream
„We think that we perfectly fit into the Energy Union. The target is to improve the security of supply, to create more liquidity in the market; more liquidity means more competition. We stimulate infrastructure projects in the internal market so, from our point of view, we’re not an enemy of the Energy Union. We are a strong supporter of the Energy Union,“ Lissek said in an interview on April 6 in Brussels a few hours before he participated in a debate at the European Parliament about „Nord Stream 2: A Critical Challenge of the Energy Union“.
Members of the European Parliament and some EU member states have been highly critical of expanding the pipeline between Russia and Germany, arguing that it is against Energy Union goals and will increase Europe’s dependence on Russia.
Nord Stream 2 has argued that the gas project will help the Energy Union achieve its three main objectives: sustainability, affordability and security of supply.
Lissek brushed off concerns that Nord Stream 2 will increase Europe’s reliance on Russia, citing data that show an additional gas demand of 140 billion cubic metres in the coming years. „If Nord Stream 2 can secure a significant stake in this with 40-50 billion cubic metres, there is enough space for other competitors. That means there is enough space and competition with LNG [liquefied natural gas] and other pipeline systems in Europe to strengthen the internal market in Europe, to secure the energy needs of Europe as well,“ the Nord Stream 2 spokesperson said.
Lissek acknowledged that there are political concerns about the project, but „we argue purely from the business viewpoint, we show that we’re a privately financed company, we have a privately financed infrastructure project“.
He pointed to the major partners (Russia’s Gazprom 50%; Germany’s E.ON 10%; BASF /Wintershall 10%; Royal Dutch Shell 10%; Austria’s OMV 10%; and France’s Engie 10%) as one the project’s strengths. „We’re following the rules of the market and we’re following all rules of the legislation in Europe. Therefore, we have a large process to undergo. We have to argue, we have to take concerns seriously and we have to talk together and we have to argue and to discuss and debate and try to follow the same approach we have developed for Nord Stream 1,“ Lissek said.
Asked if Nord Stream 2 has to comply with the EU Third Energy Package, an issue often raised by the project’s critics, Lissek said the project’s experts and promoters have said that the rules of unbundling, third-party access do not apply to the gas pipeline.
He indicated that Nord Stream 2 will not be conflicting with the Third Energy Package but the applicability of the Third Package is for the internal market. All pipelines in Europe that bring gas from outside the internal market into the internal market are considered that way and therefore Nord Stream 2 is not requesting any exception from the regular procedure, but, on the contrary, expects to be exactly treated like all other similar pipelines.
„This is to be resolved between the national regulators and the authorities here in Brussels,“ Lissek said, adding that the German Ministry of Economics has said that it does not see Nord Stream 2 under the Third Energy Package. Moreover, in relation to Nord Stream 2, the directly competent authorities are the national authorities of the countries involved. They have to apply EU law.
Nord Stream 2 has said that there is an established process, based on rule of law, there is a precedence case – Nord Stream 1 – in the same region that followed very high standards. Nord Stream 2 is following exactly the same process and all reasonable concerns can be taken up in that process based on rule of law, Lissek said.
He said that Gazprom is responsible for the contracts between the Russian gas giant and potential customers in Europe. „We are a transport company so our responsibility ends when we hand over the gas at the border with Germany,“ he said. „It is a question of contracts. We’re only responsible to transport the gas from Russia to the EU where the gas can go to Spain, Italy, France, Great Britain; this is a question of the customer,“ the Nord Stream 2 spokesperson said.
Gazprom has repeatedly spoken in favour of long-term contracts. „If there are long-term contracts, we should be happy. That is my personal opinion: if we have long-term contracts this means we have security of supply. If we have other contract situations for example with LNG the gas can go where the price is the highest. It can go to Asia or Africa or South America. LNG is nice to have and we have a lot of LNG hubs here in Europe but LNG is going where the price market is. And together with long-term contracts, the pipeline is a clear answer; a clear solution for the energy needs of Europe,“ Lissek said.
Asked whether Nord Stream 2 will be filled, he said that it will be a gradual process. „This is a ramp up stage. You start with 10-20-30-50 percent, 60 percent, depending on the customer and the market situation. It is a good result to have almost 80% utilisation for Nord Stream 1 and we will be happy when we achieve this with Nord Stream 2 as well,“ Lissek said.
Asked if he was concerned about the low oil prices, hence lower gas prices’ effect on the project, Lissek reminded that the consortium is only a transport company. „We have no influence on pricing. We’re booked, we have our revenues and we are not involved with what the price level is, who is the buyer, where does the gas go to Great Britain, to Spain, so we are here in a very comfortable situation,“ he said.
The project’s financing is like Nord Stream 1. „We aim at 30 percent equity by the shareholders and 70 percent coming from the capital market. This is an ongoing process, the banks and the creditors are looking into the business model. We will start discussions about financing, this is still an ongoing procedure,“ Lissek said.
He also noted that on April 6, Nord Stream 2 signed contracts about qualities, quantities, pricing of pipe with the Russian companies OMK and Chelpipe. „The process of implementing the project is ongoing,“ he said. Lissek noted that the plan is to start constructing the pipeline in early 2018, with the first gas end of 2019.
„Europe needs additional import pipelines. In Germany the gas transport companies have already announced additional capacity needs for transport,“ he said. „In preparation of the permits, we can undertake initial steps like route planning, environmental impact assessment to avoid any delay, so we can have the needed capacities in place when they are needed,“ he said.
He reminded that Nord Stream 1 was built in segments and the consortium plans to use the experience from building the first project. „We have a lot of experience. The procedures are known, the people are known, the companies are known so that makes it easier. But at the end it is a really big infrastructure project and you have to knock on wood,“ he said.
By Kostis Geropoulos, Energy & Russian Affairs Editor, New Europe, 12.04.2016 Baltic-course.com