The European Commission just cannot work out how it feels about the Nord Stream 2 project. In the space of just a few days, Maroš Šefčovič, the European Commission Vice-President for Energy Union, issued two conflicting statements. On 13 February, he announced that a decision with regard to the Nord Stream 2 project was imminent. «In the coming days, in very very near future will be a decision on this issue», stated Šefčovič.
On 18 February, however, he admitted that the European Commission should not expect a speedy decision regarding the compliance of Gazprom’s plans to expand the Nord Stream 2 pipeline with European rules, since European Commission lawyers were still looking into the project. That the process is only just beginning was also stated by the European Commissioner for Climate Action and Energy, Miguel Arias Cañete. In his assessment of the current state of affairs, Cañete said: «We don’t yet have all the necessary information on the project. It is very early days». He also let slip the reasons for such delays. According to Cañete, the Nord Stream 2 project has «huge political implications» for the European Commission since it would «circumvent Ukraine».
Judging by the information available, the crux of the problem for the European Commission is the urgent need to develop a new mechanism for the pre-emptive blocking of agreements in the energy sector that European countries and even individual companies have entered into or are about to enter into with Russia. To this end, among other things, the European Commission hastily approved a package of proposals on 16 February to improve the EU’s energy security. The package is still to be approved by the European Council, however. The proposals give the European Commission the right to check contracts between EU countries and foreign energy suppliers, primarily natural gas suppliers, before they are entered into «to check compliance with competition rules and internal energy market legislation».
It is clear that this is primarily aimed at Russia and its key partners in the energy sector such as Germany, Italy, Austria, France and Hungary. Legal conflicts are also unavoidable. In particular, «there are currently different points of view within the European Commission as to whether the offshore section of the Nord Stream pipeline is subject to EU rules», according to Vladimir Chizhov, Permanent Representative of the Russian Federation to the EU.
In addition, available information suggests that even if the European Commission rules against Nord Stream 2, Germany and Russia may still be able to get around the restrictions by creating an offshore gas pumping station with pipes belonging to various German companies leading from there to the continent.
Russia has also expressed an interest in the creation of a gas corridor in Southern Europe. Gazprom, the French company Edison and the Greek company Depa have signed a Memorandum of Understanding within the framework of joint plans for the Itgi-Poseidon gas pipeline project from Russia along the bottom of the Black Sea through Greece to Italy. «With the coming into play of Gazprom, Russian gas supplies to Italy could become a reality», writes the Italian newspaper Il Foglio on the prospects of the Itgi-Poseidon project.
It is clear that the controversy surrounding Nord Stream 2 and the European Commission’s obvious desire to create obstacles for a normal and mutually beneficial partnership between Russia and European countries that will safeguard the continent’s energy security are also adversely affecting the interests of Europeans themselves. Especially as it is all taking place amid significant changes in the camp of other potential gas suppliers – countries in the Persian Gulf and Iran.
In particular, and much to the surprise of the US and the EU, the authorities in Tehran have expressed their willingness to direct gas export flows not to the West, but to the East. Among other things, this involves the construction of a large underwater gas pipeline from Iran through the Gulf of Oman and the Arabian Sea to India. The Indian energy corporations Gail and Indian Oil Ltd are already discussing the project with Iranian representatives. The gas pipeline will bypass India’s main geopolitical competitor in the region, Pakistan, and have a daily capacity of 31 million cubic metres of gas. In addition, Iran and Oman have already signed a 25-year contrast worth $60 billion that will enable the two countries to build an underwater pipeline that will deliver 10 billion cubic meters of natural gas per year.
As for the other Gulf monarchies, their current financial and economic situation means that they cannot count on entering the European market.
According to HSBC analysts, falling oil prices over the next two years means that the member states of the Cooperation Council for the Arab States of the Gulf will have to refinance $52 billion worth of bonds and $42 billion worth of syndicated loans, mostly in the United Arab Emirates and Qatar. In the next two years, these countries will also face a fiscal and current account deficit of $395 billion. HSBC calculates that the total debt of the Gulf countries amounts to around $610 billion, and this includes corporate debt as well as sovereign debt.
Thus there is no-one, besides Russia, that Europe can really rely on in terms of energy security, unless you count US shale oil producers, the prospects of which depend on Saudi policy. So is it really worth blocking projects when there is simply nothing to replace them with?