U.S. has ‘understanding’ with Germany to shut Nord Stream 2 pipeline if Russia invades Ukraine -congressional aide

By Andrea Shalal

WASHINGTON (Reuters) – U.S. officials have told members of Congress they have an understanding with Germany about shutting down the Nord Stream 2 pipeline if Russia invades Ukraine, a senior congressional aide told Reuters on Tuesday.

The aide said U.S. officials told Congress they have been in contact with their German counterparts in the event of an invasion, given the massing of Russian troops on the border with Ukraine.

U.S. officials say they have received assurances from Germany the pipeline would be turned off, the aide said. But it was unclear if the two sides had agreed on a definition of invasion, the aide said.

A European diplomat told Reuters U.S. officials had made it clear to allies that they would act to sanction the pipeline in the event of an invasion, which could make any German action a moot point.

“If the U.S. imposes (additional) sanctions, it’s an academic point, because no one will be able to do business with Nord Stream 2 for fear of running afoul of U.S. sanctions.”

German officials told reporters on Tuesday that there was still a process to complete before the pipeline would even start operations.

President Joe Biden has long opposed the Russian-German pipeline. The U.S. State Department has sanctioned Russian entities related to it, but not the company behind it, as it has tried to rebuild ties with Germany that deteriorated under Donald Trump’s administration.

(Reporting by Andrea Shalal; Writing by Doina Chiacu; Editing by Tim Ahmann, Heather Timmons and Mark Heinrich)

German regulator puts brake on Nord Stream 2 in fresh blow to gas pipeline

By Vera Eckert

FRANKFURT (Reuters) -Germany’s energy regulator has suspended the approval process for a major new pipeline bringing Russian gas into Europe, throwing up a new roadblock to the contentious project and driving up regional gas prices.

The watchdog said on Tuesday it had temporarily halted the certification process because the Swiss-based consortium behind Nord Stream 2 first needed to form a German subsidiary company under German law to secure an operating license.

European prices jumped almost 11% on news of the hold-up, with the Dutch front-month contract hitting 90.40 euros/MWh in afternoon trade.

“This does push back expected timelines quite a bit,” said analyst Trevor Sikorski at Energy Aspects, adding that it was unclear how long the process of establishing a new company and reapplying for certification would take.

First flows through the pipeline look very unlikely in the first half of 2022, he added.

Nord Stream 2 has faced stiff opposition from the United States and some European states, which say it will make Europe too reliant on Russian gas. But other European governments say the link is vital to secure energy supplies, with gas prices surging in recent weeks and the threat of power outages looming this winter.

Nord Stream 2 said it had been notified by the regulator about the certification decision. “We are not in a position to comment on the details of the procedure, its possible duration and impacts on the timing of the start of the pipeline operations,” it added.

The Kremlin was not immediately available to comment.

“Any delays in the pipeline certification, all the more so on the eve of winter, is not in the interests of the European Union, that’s without any doubt,” Konstantin Kosachyov, deputy chairman of Russian parliament’s upper house, told TASS news agency.

The regulator, the Bundesnetzagentur, said it would only assess an application after a transfer of major assets and budgets for staffing to a German subsidiary.

“A certification for the operation of Nord Stream 2 will only be considered once the operator is organized in a legal shape compliant with German law,” it said.

Once these preconditions had been met, it said it could continue assessing the submission in the rest of the four-month application period. Before the suspension, that period was meant to run until early January.

Lawyers said the move, viewed by some gas market traders as politically charged, made sense from a regulatory perspective because it meant the pipeline’s operators in Germany would be answerable to local rules.

Essen-based law firm Rosin Buedenbender said a number of limited liability company options were available.

UKRAINIAN OPPOSITION

Ukraine is one country bitterly opposed to the pipeline, which has fed into broader tensions between Kyiv and Moscow at a time when the United States has accused Russia of building up troops near Ukraine in preparation for a possible attack, an allegation the Kremlin has dismissed.

Russia annexed Ukraine’s Crimean peninsula in 2014 and Moscow-backed separatists took control of the Donbass region in eastern Ukraine that same year.

The head of the Ukrainian energy firm Naftogaz told Reuters that he welcomed the German energy regulator’s decision.

“Good,” Yuriy Vitrenko said. “This is an important point, which suggests that the German regulator shares our position that certification cannot only apply to the pipeline in Germany, but should apply to the entire pipeline from the territory of the Russian Federation to the territory of Germany.”

Kyiv will lose revenues if gas from Russia bypasses it and it accuses Moscow of using energy as a weapon to threaten Europe’s security.

Moscow has denied this and says Nord Stream 2 is a purely commercial venture that complies with European energy rules.

Ukraine has successfully applied to be part of the consultation process to certify the pipeline.

Moscow has already used a route under the Baltic Sea for Nord Stream 1 – the predecessor to Nord Stream 2 – which has a capacity of 55 billion cubic meters (bcm), equivalent to half Germany’s annual gas usage.

Nord Stream 2 will double that and make Germany a central arrival hub for European gas volumes for onward distribution.

The Berlin economy ministry and the European Commission have been made aware of its notice to Nord Stream 2.

The Commission has two months after the German regulator’s decision to assess the application for its part.

“Under the current circumstances there is further downside for the timing of the start-up of Nord Stream 2 because even though Germany is more friendly towards this project than EU, the pipeline’s regulatory certification could face even more hurdles during the EU commission review stage,” said Carlos Torres Diaz, head of gas and power markets at Rystad Energy.

(Reporting by Vera Eckert Additional reporting by Vladimir Soldatkin, Pavel Polityuk, Nora Buli and Susanna Twidale; Writing by Pravin Char; Editing by Miranda Murray, Edmund Blair and Mark Potter)

Russia close to using natural gas as weapon in Europe’s gas crunch – Biden energy adviser

By Timothy Gardner

WASHINGTON (Reuters) -U.S. President Joe Biden’s global energy security adviser said on Monday that Russian President Vladimir Putin is getting close to using natural gas as a political tool if Russia is holding back fuel exports to Europe as it suffers an energy crunch.

“I think we are getting close to that line if Russia indeed has the gas to supply and it chooses not to, and it will only do so if Europe accedes to other demands that are completely unrelated,” Amos Hochstein, Biden’s adviser, told reporters, when asked if Putin was using gas as a weapon.

Hochstein said gas prices in Europe have been driven higher not just by events in the region but also by a dry season in China that has reduced energy output from hydropower and increased global competition for natural gas.

Still, while several factors have led to the European gas crisis, Russia is best placed to come to the aid of Europe, he said.

“There is no doubt in my mind, and the (International Energy Agency) has itself validated, that the only supplier that can really make a big difference for European energy security at the moment for this winter is Russia,” Hochstein said. Russia can increase upstream production of gas, and should do it quickly through existing pipelines, he said.

Putin has rejected suggestions that Moscow was squeezing supplies for political motives, saying it will increase flow as much as partners ask.

Putin has blamed record high prices on the EU’s energy policy and said Russia can boost supplies to Europe once its Nord Stream 2 gas pipeline gets approved.

Yuriy Vitrenko, the head of Ukraine’s state energy company Naftogaz, this month said Russia was trying to blackmail Europe into certifying its Nord Stream 2 gas pipeline by keeping fuel supplies low. The pipeline, which Washington opposes because it would circumvent Ukraine, is finished but needs approvals from Germany to start delivering Russian gas under the Baltic Sea to Europe.

Approvals from Germany and the European Commission for Nord Stream 2 will likely take until March, so if Russia says it can quickly boost gas flow through Nord Stream 2, it should be able to do so now through existing pipelines, Hochstein said.

“You can’t have it both ways,” Hochstein said

(Reporting by Timothy Gardner; Editing by Mark Porter)

Merkel, Biden face tough talks on Russian gas pipeline, China

By Andreas Rinke and Joseph Nasr

BERLIN (Reuters) – Chancellor Angela Merkel and President Joe Biden hold talks at the White House on Thursday that experts say are unlikely to yield major breakthroughs on divisive issues like a Russian gas pipeline to Germany and a U.S. push to counterbalance China.

Both sides have said they want to reset ties strained during the presidency of Donald Trump. Yet their positions on the most divisive issues remain far apart.

Merkel has rejected opposition from the United States and eastern European neighbors to the almost completed Nord Stream 2 pipeline which they fear Russia could use to cut out Ukraine as a gas transit route, depriving Kyiv of lucrative income and undermining its struggle with Moscow-backed eastern separatists.

And during her 16 years in power, she has worked hard for closer German and European economic ties with China, which the Biden administration sees as a global threat that it wants to counter with a joint front of democratic countries.

“The problem for the U.S. is that Merkel has the upper hand, because she has decided that the status quo in the trans-Atlantic relationship is good enough for Germany,” said Ulrich Speck, an independent foreign policy analyst. “Biden by contrast needs to win over Germany for his new China strategy.”

Officials from both sides are engaged in intense discussions to resolve the issue and stave off the reimposition of sanctions that Biden waived in May. Biden has opposed the project, but he is also facing increasing pressure from U.S. lawmakers to reimpose sanctions.

“Nord Stream 2 is the area where you most realistically can expect progress,” said Thorsten Benner of the Global Public Policy Institute (GPPi). “Merkel may hope to get away with providing guarantees for Ukraine’s continued role as a gas transit country and a vague snapback mechanism that would kick in if Russia seeks to cut transit through Ukraine.”

A senior U.S. administration official, speaking on condition of anonymity, said Biden would underscore his opposition when he meets with Merkel, but the waiver had given diplomatic space for both sides to “address the negative impacts of the pipeline”.

“Our teams are continuing to discuss how we can credibly and concretely ensure that Russia cannot use energy as a coercive tool to disrupt Ukraine, eastern flank allies or other states,” the official said.

Merkel, who will step down after an election in September, vowed during a news conference on Monday with visiting Ukrainian President Volodymyr Zelenskiy that Germany and the European Union will guarantee Ukraine’s status as a transit country.

“We promised Ukraine and will keep our promise,” said Merkel. “It is my custom to keep my word and I believe this applies to every future chancellor.”

The issue of China is more complicated.

Merkel was an advocate of an investment pact between the European Union and China struck late last year on the eve of Biden taking office, and she has been criticized for not facing up to Beijing on human rights violations in Hong Kong and against a Muslim minority in Xinjiang, which the United States has labelled a genocide.

“There will likely be a joint call by Biden and Merkel for China to step up its efforts on carbon reduction and global health, maybe a reference to the need to further open the Chinese market,” Benner said. “But don’t expect anything from Merkel that will remotely look like there is a joint trans-Atlantic front on China.”

The two countries also remain at odds over a proposed temporary waiver of intellectual property rights to help increase production of COVID-19 vaccines, a measure backed by Washington, and the United States’ refusal to ease travel restrictions on visitors from Europe.

(Additional reporting by Andrea Shalal in Washington; Writing by Joseph Nasr; editing by David Evans)

Putin says Nord Stream 2 gas link to be finished as U.S. seeks good European ties

By Vladimir Soldatkin and Katya Golubkova

ST PETERSBURG, Russia (Reuters) -Russia’s Nord Stream 2 gas pipeline is ready to start pumping gas to Germany and the final stretch will be completed as the new U.S. administration seeks good relations with “key partners in Europe,” President Vladimir Putin said on Friday.

Successive U.S. administrations have imposed sanctions to try to block the project that will ship gas directly from Russia to Germany, bypassing Western ally Ukraine.

Russia’s Gazprom has pressed ahead with building the pipeline after U.S. sanctions left it without a Western pipe-laying company in late 2019, but the administration of U.S. President Joe Biden last month waived some sanctions.

“I think it should be completed especially given that the new U.S. administration speaks of its intention to build up good relations with its key partners in Europe,” Putin told a forum in St Petersburg. “How can you build good relations with your partners and neglect their interests? This is a nonsense.”

Russia has finished laying pipes for the Nord Stream 2 first line and is set to finish the second one within two months, Putin said. Less than 100 kilometers (62 miles) are left to complete the project, Deputy Prime Minister Alexander Novak said.

Once Nord Stream 2 is finished, it will double the existing route’s annual volume to 110 billion cubic meters and increase European energy dependency on Russia.

It also competes with shipments of U.S. liquefied natural gas and Biden has described the project as a “bad deal” for Europe.

But he explained the waiving of some sanctions last month by saying the project was nearly complete, and that continuing sanctions could have harmed ties with Europe.

Germany has advocated the project, while Ukraine is a strong opponent and sees it as a means for Moscow to exert political pressure and depriving Kyiv of transit fees.

Gazprom will start filling the first line with gas as soon as Germany grants its approval, Putin said. Gazprom shares rallied after the announcement, adding 0.75% and reaching 274 roubles ($3.76) per share, their highest since mid-2008.

As governments and investors ratchet up the pressure to decarbonize the fuel mix, fossil fuel energy is losing market share to renewable power, but Putin was bullish about demand and said that the Nord Stream 2 was a clean project as it did not involve fracking.

Russian gas supplies to Europe are seen exceeding 200 bcm this year and may rise by as much as 50 bcm in the next decade, Putin said. Ukraine must show good will if it wants Russian gas transit to Europe and the related fees to remain, he said.

($1 = 72.8970 roubles)

(Reporting by Vladimir Soldatkin and Katya Golubkova; additional reporting by Oksana Kobzeva in Moscow and Timothy Gardner in Washington; Editing by Jon Boyle, Jonathan Oatis and Barbara Lewis)

U.S.’s Blinken warned Germany’s Maas about Nord Stream 2 sanctions

By Robin Emmott

BRUSSELS (Reuters) – U.S. Secretary of State Antony Blinken said on Wednesday he had told his German counterpart that sanctions against the Nord Stream 2 natural gas pipeline were a real possibility and there was “no ambiguity” in American opposition to its construction.

Berlin has so far been betting the new U.S. administration of President Joe Biden will take a pragmatic approach to the project to ship Russian gas to Europe because it is almost completed, officials and diplomats have told Reuters.

Reiterating Biden’s concerns about the pipeline from Russia to Germany, Blinken said he told German Foreign Minister Heiko Maas on Tuesday in a private meeting that companies involved in the project risked sanctions, particularly at a point when construction might finish.

“I made clear that firms engaged in pipeline construction risk U.S. sanctions. The pipeline divides Europe, it exposes Ukraine and central Europe to Russian manipulation and coercion, it goes against Europe’s own stated energy goals,” Blinken told a news conference.

The Kremlin says Nord Stream 2, a $11 billion venture led by Russian state energy company Gazprom, is a commercial project, but several U.S. administrations have opposed the project and Europe has vowed to reduce its reliance on Russian energy.

The United States and eastern European Union countries such as Poland say Nord Stream 2 is part of Russian economic and political measures to manipulate European countries and undermine transatlantic ties.

“What I said (to Maas) was that we will continue to monitor activity to complete or certify the pipeline and if that activity takes place, we will make a determination on the applicability of sanctions,” Blinken said.

He said it was important to carry the message directly to Maas, “just to make clear our position and to make sure there is no ambiguity.”

Reuters reported on Feb. 24 that 18 companies recently quit work on the pipeline to avoid sanctions.

Asked about a possible compromise in which Germany’s energy grid regulator could be empowered to stop gas flowing if Russia crossed a line, Blinken declined to comment.

Last month, a former German ambassador to the United States floated the idea of a compromise between Washington and Berlin that would have given the completed pipeline a use as political leverage.

Triggers for what the former envoy, Wolfgang Ischinger, called an “emergency brake” might include a flare-up in violence between Ukraine and Russia, which annexed Ukraine’s Crimea peninsula in 2014, or if Moscow sought to undermine Kyiv’s existing gas transit infrastructure.

(Reporting by Robin Emmott; Editing by Andrew Heavens and Edmund Blair)

U.S. lawmakers ask Blinken for briefing on Nord Stream 2 natgas pipeline

By Timothy Gardner

WASHINGTON (Reuters) – Several U.S. Representatives on Wednesday raised pressure on the State Department to share plans on potential sanctions on the Nord Stream 2 natural gas pipeline Russia is racing to finish to take fuel to Europe.

“If completed, Nord Stream 2 would enable the Putin regime to further weaponize Russia’s energy resources to exert political pressure throughout Europe,” two Republicans including Michael McCaul, and two Democrats including Marcy Kaptur, wrote in a letter to Secretary of State Antony Blinken.

U.S. representatives and senators have said that the Biden administration has missed a deadline of Feb. 16 to issue Congress a report required by recently passed law on companies helping Russia’s state energy company Gazprom lay pipeline, insure vessels, and certify construction work.

Several companies, including Zurich Insurance Group have already left fearing sanctions and companies listed in report could drop out of the project, making completion difficult.

Nord Stream 2 is more than 90% complete but requires additional tricky work in deep waters of the Baltic Sea off Denmark. The pipeline would bypass Ukraine, through which Russia has sent gas to Europe for decades, depriving it of lucrative transit fees and potentially undermining its struggle against Russian aggression.

The representatives asked Blinken for a briefing with State Department officials to inform them of the status of the report and their assessment of possible sanctionable activity of vessels believed to be helping to finish the project.

President Joe Biden believes the $11 billion pipeline, which would double the existing capacity of the Nord Stream system to take gas undersea to Germany, is a “bad deal for Europe” according to his press secretary Jen Psaki.

State Department spokesman Ned Price told reporters last week that “sanctions are only one” of many tools and that the department will work closely with allies and partners to reinforce European energy security and to safeguard against “predatory behavior”. The department did not immediately respond to a request about the requested briefing.

The representatives said the briefing should include details on “any proposals offered to the Biden administration on the future of the pipeline that aim to persuade the administration to forego or weaken the mandatory sanctions,” apparently referring to any talks between Washington and Germany for a deal on the project.

Gazprom insists the project will be completed in 2021.

(Reporting by Timothy Gardner; Editing by Marguerita Choy)