Denmark greenlights Nordstream 2

Despite US Congress passing resolutions calling for an end to construction of the pipeline, construction in Danish waters is scheduled to start in the coming weeks. Copenhagen maintains that it was “obliged to allow the construction of transit pipelines” under the UN Convention on the Law of the Sea.

President Donald Trump has previously threatened to impose sanctions on countries tied to Nordstream 2, saying it makes Germany “a hostage to Russia”. But Dan Jørgensen, Denmark’s energy and climate minister, told a press briefing of foreign journalists that it was “a purely administrative decision”.

Gazprom, Russian energy giant, noted that the work on more than 80 percent of the pipeline — over 2100 km — has already been done. Cheap Russian gas supplies will enable European customers to save some 8 billion euros on their gas bill in 2020 alone.

Shares in Gazprom rose by more than four percent on the Moscow stock exchange after the Danish announcement, hitting their highest levels since 2008.

The Russian share of Europe’s gas market have reached record highs and this trend will continue as the Nord Stream 2 and Turk Stream pipelines, which will become active shortly this year, will deliver an additional 86,5 billion cubic meters annually to Europe.

According to a study done by the University of Cologne EWI, Nord Stream 2 also means that “Russia can supply more gas to the EU decreasing the need to import more expensive LNG” from the US. Germany’s economy is dependent on imports for 98 percent of its oil and 92 percent of its gas supply.

In a press release on Wednesday the Danish Energy Agency said it “has granted a permit to Nord Stream 2 AG to construct a section of the Nord Stream 2 natural gas pipelines on the Danish continental shelf southeast of Bornholm in the Baltic Sea”.

There were two proposed routes and the agency approved the shortest route, since it provides the least risk and impact from an environmental and safety perspective, according to the press release.

Nordstream 2 will double the capacity of the existing Nord Stream 1 to 110 billion cubic meters (bcm) per year, more than a quarter of the EU’s gas consumption. European Commission’s latest data on EU imports of energy products in October, revealed that eleven member states imported in 2018 more than 75 percent of their total national imports of natural gas from Russia.

“Pipelay has been completed in Russian, Finnish and Swedish waters, and for the most part in German waters. The construction of both landfall facilities in Russia and Germany is nearing completion,” the Nord Stream 2 AG said in a statement.

The route will pass through the Danish Exclusive Economic Zone (EEZ), outside of the Danish territorial waters. The pipelay sections in Russian, Finnish and Swedish waters, and for the most part in German waters, have been completed while construction of both landfall facilities in Russia and Germany is nearing completion.

During a recent visit to Lithuania, US Energy Secretary Rick Perry warned that the Nordstream 2 pipeline “would increase Russia’s leverage over Europe’s foreign policy” and added that together with the TurkStream pipeline – which will supply Russian gas to Turkey via the Black Sea – “would enable Moscow to end gas transit through Ukraine by the close of the decade”.

Ukrainian President Vladimir Zelensky has slammed Denmark’s decision to grant a Russian gas project a building permit, saying it “strengthens Russia and weakens Europe”. Zelensky spoke during a joint news conference with NATO chief Jens Stoltenberg.

“We understand that this is not just a matter of energy security, it is a geopolitical issue. Therefore I will tell you frankly that this strengthens Russia and weakens Europe,” Zelensky said. Ukraine would like to remain a major transit route for Russian gas because of lucrative transit fees.

Gazprom is also set to become China’s top gas exporter by 2035. The Power of Siberia pipeline under construction in Eastern Siberia to transport gas to Far East countries will become this year too, it and will deliver 38 billion cubic metres of natural gas annually to China, which will make China Russia’s second-largest gas customer after Germany.