🎧 Nord Stream 2: the plot thickens!

The day after the European Commission proposed an outright ban on Russian gas in the EU, a Swiss court threw a lifeline to Nord Stream 2.

The ruling opens the door to a potential revival of the defunct Russia-Germany gas pipeline that was half destroyed in a dramatic subsea explosion in 2022.

How should we square the circle of an EU ban on Russian gas with a possible revival of Nord Stream 2? How does the restructuring ruling affect the ownership of this contentious piece of infrastructure? Would any buyer really be interested in owning it?

This episode of Energy Flux: On Air unpacks the legal ruling and weighs up the options in light of the EU’s push to outlaw Russian gas entirely, which I covered in last week’s EU LNG Chart Deck.

I also discuss the historical purpose of Nord Stream 2, the role it played before and during the 2021-22 energy crisis, and how Gazprom’s actions have galvanised a European political consensus against a resumption of Russian gas dependency.

The full transcript is included below.

Thanks for listening,

— Seb

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Episode transcript:

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Hi there, and welcome back to Energy Flux On Air.

(00:00:23):

I'm your host,

(00:00:24):

Seb Kennedy,

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founding editor of Energy Flux,

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the energy newsletter analyzing European natural gas and global energy markets

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through the lens of Europe's energy transition and global geopolitics.

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I'm doing something a bit different on this episode.

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I'm going to dedicate almost the entire show to a single listener question.

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It's such an interesting topic and doing it justice requires quite a lot of explaining,

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especially in the current regulatory environment.

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So without further ado, the question comes from Mark in Hertfordshire.

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He says, Hi Seb, love the show.

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Can you give us your take on the Nord Stream 2 insolvency proceedings?

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How should we square the circle of the stay of execution granted by the Swiss

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Bankruptcy Court with the EU's proposed Russian gas ban?

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Well, thanks for the question, Mark.

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Nord Stream 2's insolvency saga is like the latest chapter in an endless legal

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thriller full of action and suspense with geopolitical twists.

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The Russian gas ban proposed by the EU that you referred to adds a fresh layer of

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complexity and uncertainty into an already fraught outlook for this piece of

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critical infrastructure.

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So I'm going to unpack the key elements of the legal situation before then going on

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to look at the Russian gas ban itself and how the two fit together to understand

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where the pipeline might be headed and what it all means for European energy markets.

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But first, just some brief background facts on Nord Stream 2 for unfamiliar listeners.

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So,

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Nord Stream 2 is a twin undersea pipeline built to carry up to 55 billion cubic

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metres of Russian gas per year directly from Russia to Germany under the Baltic Sea.

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And it ran alongside an operational project called Nord Stream or Nord Stream 1.

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It cost about 11 billion euros to build and was and is fully owned by Gazprom,

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but financed by five Western lenders,

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energy companies Uniper,

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Wintershell,

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Deo,

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Shell...

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OMV and ONGIE.

(00:02:42):

They financed about half of the construction costs through loans rather than equity,

(00:02:46):

and they ponied up about 700 billion euros each.

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But Gazprom owns 100% of the share capital of Nord Stream 2 AG,

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which is the Swiss incorporated holding company for the Nord Stream 2 project.

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Nord Stream 2 has been a real political flashpoint.

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Construction was completed in 2021, but it was never commissioned.

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Germany halted its launch in February 2022 amid Russia's full land invasion of

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Ukraine and Western sanctions.

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One of its twin pipes was sabotaged in 2022,

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of course,

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alongside the two operational strings of Nord Stream 1 in that dramatic subsea

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detonation that was worthy of a James Bond spy movie.

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And the insolvency proceedings,

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they relate to effectively the undamaged single string of Nord Stream 2,

(00:03:40):

because without operations and shrouded in sanctions,

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then the holding company,

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Nord Stream 2 AG,

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was to all intents and purposes bankrupt, but not officially so.

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So a court in the Swiss canton of Zug in Switzerland opened the restructuring

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rather than liquidation proceedings in early 2023.

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and granted successive moratoriums until the 9th of May last week,

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when it approved a debt restructuring plan.

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And that's a little bit like Chapter 11, the US bankruptcy protection process.

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This is a key asset that's been a focal point,

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a flashpoint for political arguments across the EU and the rest of Europe for many years.

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And the reigning line,

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single line,

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that can carry up to about 27 billion cubic metres of gas per year is essentially

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the principal asset that's being the subject of potentially being auctioned or

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refinanced or restructured or sold under the supervision of that Swiss court.

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So the court itself approved this debt restructuring deal,

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and that essentially spared Nord Stream 2 AG,

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the Gazprom-owned holding company,

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from official bankruptcy.

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Small creditors were paid off in full,

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and the claims of those major European lenders like Shell and Winter Shaldea

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they were effectively elevated above the claims of Gazprom.

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And this is a really interesting point,

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because apparently the shareholder voting rights that Gazprom held in Nord Stream 2 AG,

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they have,

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to all intents and purposes,

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been suspended,

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which means that if the pipeline is sold,

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then Gazprom,

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as an equity holder and a debtor to those European lenders,

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will only get anything after all the creditor claims are paid off.

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And that's really important because,

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you know,

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if it cost them $11 billion to build and that was for two strings,

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then,

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you know,

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how much can you realistically expect to get for one string in the context that I'm

(00:05:53):

about to describe where Russian gas is...

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facing immense hurdles and is not entirely likely to return to the European markets,

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potentially ever,

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or at least for many years.

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So these Western creditors have about 700 million euros each claim over Nord Stream

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2 AG and the infrastructure that it owns.

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And they're very much now in the driving seat.

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So this restructuring procedure has really kind of turned the tables over the power

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and control over the fate of Nord Stream 2.

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Because before Gazprom really called the shots as the sole shareholder,

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but now it seems that the Western creditors have a bit more of the upper hand.

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That said, they do have an aligned interest.

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I think that both sides would like to kind of get something back from this,

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you know,

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immensely expensive white elephant that's been half blown up on the bed of the

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Baltic Sea.

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But quite how they go about doing that could soon see their interests diverge.

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And that's when the power play could come into effect because we've seen...

(00:07:00):

interest from a US investor,

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this kind of mysterious chap called Stephen Lynch,

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who cropped up last year,

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said he wants to buy the pipeline for quote-unquote pennies on the dollar,

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which would flip control over this critical asset to Western Australia.

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into Western hands,

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allow Washington to essentially hold a stranglehold over Russian gas flows into Europe,

(00:07:24):

which is kind of an interesting geopolitical twist on the future energy and

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security arrangements for Europe.

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i think it's a bit fanciful really because you know like nordstrom 2 it never

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received german certification so it wasn't allowed to start up and the eu's gas

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directive which is an important regulation that adds a hurdle to operating

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nordstrom 2 and so like pipelines that enter the the eu single energy market they

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must separate

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the legal ownership of the pipeline from the physical gas supply of the gas that

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the pipeline is carrying.

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So you can't own the pipeline and the gas supply entirely.

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And that's actually why the Western energy companies opted for a financing role

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rather than taking shareholder stakes.

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They all wanted

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rights on Nord Stream 2 and to own the molecules flowing through the pipe.

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And they couldn't have that if they owned stakes in the Nord Stream 2 AG operating

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company as well.

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So that's why we're in this situation now.

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So what's going to happen?

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Well, it's worth recalling at this stage that Gazprom has a lot of legal baggage.

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There's about 13 billion euros in unsettled arbitration claims.

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from Uniper,

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which is one of the creditors,

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to Nord Stream 2 AG for non-delivery of gas under their previous long-term contract.

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So you can imagine a third-party buyer wants to come in,

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take control of this potentially operational single string of Nord Stream 2,

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But then all the gas revenues could be seized because,

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you know,

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Gazprom owes a lot of money to Uniper and hasn't paid up for cutting off gas in the

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2021-2022 crisis invasion period.

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So that's probably going to be

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A bit of a minefield, really, for any new owner of the infrastructure.

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And then back to Mark's question,

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you know,

(00:09:24):

what about this new element,

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the EU's Russian gas ban?

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How do you square the circle of the,

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you know,

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the kind of lifeline to Nord Stream 2's potential resuscitation with the fact that

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Brussels is floating a quite serious sounding plan to actually...

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outlaw the supply or delivery or trade of russian gas within the eu and that could

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start as soon as the end of this year so they they published a roadmap last week

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almost around about the same time as the insolvency ruling which was kind of an

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interesting timing for that then this roadmap says there'll be no spot sales and no

(00:10:01):

new contracts after 2025 for russian gas

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And it's pretty sweeping, the way it's been proposed.

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It's quite bold,

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and it seemed to catch a few commentators by surprise for its boldness,

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because it would,

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if passed,

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rule out any flow of Russian origin gas along Nord Stream 2 or any other pipeline.

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regardless of who owns the pipeline and obviously you can't change where nordstrom

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2 starts or ends you know it is a fixed piece of infrastructure so it's very

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difficult to put anything down that pipe into europe that's that's not russian gas

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So if this gas ban comes into effect,

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then it's very difficult to see how Nord Stream 2 has any value whatsoever.

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But, and there's always a but with these things, of course, isn't there?

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The Russian gas ban, well, it hasn't been implemented yet.

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And when you start to look at it, you start to think, well, actually...

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There could be a lot of compromises.

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I mean,

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I think the European Commission's proposing it because they want to get ahead of

(00:11:06):

any possible settlement over Ukraine,

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which I'll get onto as well a bit later on.

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They want to kind of close the door on Russian gas coming back as part of a peace settlement.

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But we've already seen how Russian energy products,

(00:11:20):

Russian commodities,

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have managed to skirt around Western sanctions.

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Russian gas could conceivably be rebranded by doing gas swaps,

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like pumping the gas into Azerbaijan,

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then Azerbaijan.

(00:11:34):

that freeing up gas that azerbaijan produces for its domestic market to then export

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through you know the southern gas corridor or the same with turkey as well because

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turkey is a massive kind of transit route for for russian gas because they have the

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turkstream pipeline that runs under the black sea and that's now the main entry

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point for for russian gas indirectly into the eu through turkey so they could just

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send more russian gas through uh through turkey and you

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essentially kind of whitewash it of its origins,

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and then Turkey's even saying they signed an agreement with Romania after the

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Russian gas ban was proposed.

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They signed this kind of high-level political agreement,

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the leaders of Romania and Turkey saying that Romania's going to start buying

(00:12:15):

Turkish gas now.

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which seems like quite an affront to the European Commission,

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because it's really blatantly not going to be Turkish gas.

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I think Turkish gas, if I recall right, only supplies about 5% of Turkish domestic gas needs.

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So it's kind of like, well, guys, where are you going to get the gas from then?

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You've got this kind of massive Russian gas pipeline coming across the Black Sea,

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and Turkey's going to provide entirely Turkish gas to Romania.

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Right, yeah, sure, okay.

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All right,

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anyway,

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so,

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you know,

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like,

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there is this possibility that,

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you know,

(00:12:49):

Russian gas will be rebranded in some form or another and still find its way into

(00:12:54):

European markets.

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The big question is really,

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like,

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you know,

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the ban,

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if it's introduced,

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then,

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like,

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how fiercely will it be policed?

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Does it rest on member states' willingness to enforce it?

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Because,

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you know,

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judging by Romania's attitude,

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then it sounds like they'd be quite happy to kind of go along with the charade that

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Turkish gas is Turkish and it's not actually Russian gas.

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And I'm sure there'll be lots of other member states who are quite willing to flout the ban.

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I mean, Hungary, Slovakia, they're all very kind of Russia-friendly, aren't they?

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And they'd quite happily get their hands on, you know, non-Russian Russian gas if they could.

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So,

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you know,

(00:13:29):

it's like,

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how can the EU trace and crack down on Russian gas swaps with these countries?

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It's,

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you know,

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it's hard to see it not being laundered to avoid being penalised by these new rules.

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And there are other questions as well.

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So if it's like a selective ban against a single country's exports,

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does that expose the EU to a Russian challenge before the World Trade Organization?

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Because that kind of could flout the TO rules to enabling free and fair trade.

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That's an unanswered legal question.

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um and and i think there's like the biggest question of all really is and i think

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this is kind of what the ban is intended to address is you know what happens if

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there's a peace deal in ukraine which puts russian gas exports at the heart of any

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agreement between the sides you know if there's if there's a kind of negotiated

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settlement and the big prize for moscow is that it gets some of its european market

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back

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for gas and maybe other energy products as well,

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then it's hard to see how this Russian gas ban can really be enforced,

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or quite how that would play out in the negotiating table.

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And the other aspect of this as well,

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of course,

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is that Ukraine itself is in a really,

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really difficult energy situation.

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It's a war-torn country.

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struggling to replenish its severely depleted gas storages they went as low as

(00:14:56):

about three percent i think over the winter and they haven't been replenished much

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yet so far at this early stage of the refilling season and my understanding is that

(00:15:05):

pipeline access into ukraine is actually quite constrained by very high border

(00:15:11):

tariffs from southeast europe and limited interconnector capacity availability from

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poland

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So,

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you know,

(00:15:19):

an EU ban on Russian pipeline gas,

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if effective,

(00:15:23):

could actually force Ukraine to turn to Russian gas to help meet its domestic needs

(00:15:28):

and refill those gas storage facilities.

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And that would really weaken Kiev's negotiating hand at a critical moment in the conflict.

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So there are a lot of really kind of knotty,

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difficult trade-offs at the heart of this Russian gas ban that make you wonder if

(00:15:43):

it could really be introduced and enforced as the Commission is proposing.

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So just to summarise,

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I'd say,

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well,

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an EU ban on Russian gas could be very leaky,

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but I would say that the ultimate fate of Nord Stream 2 is probably bound up in the

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Ukraine peace talks,

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which means it's not really in Europe's hands,

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because Europe isn't really in the driving seat when it comes to Ukraine.

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Obviously, they are a material actor, but...

(00:16:10):

The big players are the US,

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Russia and Ukraine,

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of course,

(00:16:14):

because Ukraine can continue fighting as long as it has access to weaponry,

(00:16:19):

although that could be curtailed again if the US and Russia agree some sort of deal

(00:16:26):

and they could turn the pressure on to the Ukrainians to force them...

(00:16:29):

to stop fighting by cutting off access to military intelligence and to US weapons.

(00:16:34):

Well, you know, that could, again, turn the tables on the battlefield, couldn't it?

(00:16:39):

But, you know, the war is dragging on.

(00:16:41):

There are putative talk going on between Moscow and Washington,

(00:16:44):

but apparently getting nowhere,

(00:16:45):

as far as I can tell,

(00:16:47):

from the outside.

(00:16:47):

Apparently,

(00:16:48):

due primarily to the Kremlin's intransigence on a bunch of totally unrealistic red

(00:16:54):

lines that...

(00:16:55):

I won't get into here, but essentially they want Ukraine on a platter.

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And I think that even the kind of Kremlin-friendly administration in the White

(00:17:03):

House is kind of struggling to sell that to anybody but the most ardent kind of

(00:17:10):

Russiophiles who seem to be running amok.

(00:17:12):

at the moment in the halls of power in washington so where's it all going to go i

(00:17:16):

mean peace you have to think peace in ukraine it will have to prevail in some form

(00:17:20):

or another it might be a kind of ugly unstable unsustainable unenforceable and

(00:17:26):

highly damaging peace deal that really undermines european security interests for

(00:17:31):

decades to come but a deal of some description perhaps that kind of a deal would

(00:17:36):

almost certainly have to be done

(00:17:38):

at some point, because everybody loses in a stalemate, which is essentially what we're in now.

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I don't think either side wants to get bogged down in a forever war,

(00:17:46):

but I mean,

(00:17:47):

I guess at the same time,

(00:17:48):

the way things are going,

(00:17:49):

you can't rule that out either.

(00:17:51):

Where does that leave us?

(00:17:52):

Well, I think it's worth mentioning, just to take a step back,

(00:17:55):

And to think about Nord Stream 2 and why it was built in the first place.

(00:18:00):

I mean,

(00:18:01):

Nord Stream 2 was proposed and built by Russia alongside Nord Stream 1 as a means of,

(00:18:07):

for the Russian side,

(00:18:08):

cutting Ukraine out of the equation.

(00:18:11):

Because Ukraine, of course, earned many billions of euros in transit fees prior to 2022.

(00:18:19):

And just by having this very elaborate and high-capacity transmission system that

(00:18:25):

connected Russian,

(00:18:27):

Siberian gas-producing fields with these kind of prized premium European markets,

(00:18:33):

then they were the middleman.

(00:18:34):

And they took a cut,

(00:18:36):

essentially,

(00:18:36):

for the kind of rentier economy arrangement,

(00:18:40):

where it was just...

(00:18:41):

just like money flooding into Ukraine.

(00:18:44):

And I've been told,

(00:18:45):

and I've never been to Ukraine,

(00:18:46):

never been to Kiev,

(00:18:48):

but I've been told that these immense checks just dropping into Kiev,

(00:18:51):

they fostered a real kind of sprawling,

(00:18:54):

parasitic kleptocracy that was just completely riddled with corruption.

(00:18:58):

I've heard it described as a kind of mafia organisation that just sprung up to gorge on these

(00:19:04):

Russian gas transit fees over the years and that was one thing that EU leaders

(00:19:09):

pretty much turned a blind eye to,

(00:19:11):

along with so much else in the years leading up to Russia's annexation of Crimea in 2014.

(00:19:17):

And I think that the Russian side got sick of kind of bankrolling these mafia types

(00:19:22):

in Kiev and wanted to cut them out of the equation.

(00:19:24):

They wanted to just bypass Ukraine

(00:19:26):

And probably strategically so that they could then think about,

(00:19:30):

you know,

(00:19:30):

then exerting their will over Ukrainian sovereignty and eventually planning an

(00:19:35):

invasion of various bits,

(00:19:37):

the annexation of Crimea and then the full land invasion.

(00:19:39):

They wanted to kind of take Ukraine back.

(00:19:41):

One way of doing that or one of the many steps leading up to being able to do that

(00:19:46):

was to kind of end their access to Russian gas transits.

(00:19:50):

which of course did eventually finally come to an end on the 1st of January this year.

(00:19:55):

Russian transits of gas through Ukraine have halted.

(00:20:01):

And so,

(00:20:01):

you know,

(00:20:01):

that is another loss of revenue for Ukraine in this war,

(00:20:05):

which was kind of crazy to think that they were still earning Russian transit

(00:20:10):

revenues for a couple of years after the invasion in February 2022 for transiting

(00:20:15):

Russian gas to European buyers,

(00:20:16):

just like they always had done.

(00:20:20):

There's another side note that's relevant in this story.

(00:20:24):

Everyone says that rushing gas is cheap, but that's a myth.

(00:20:28):

Remember that liquefied natural gas,

(00:20:30):

so LNG from global suppliers,

(00:20:33):

was introduced into Europe as a means of holding Gazprom's feet to the fire in

(00:20:38):

contractual negotiations,

(00:20:40):

because in its heyday Gazprom sold gas to lots of EU utilities and industrials

(00:20:45):

under these

(00:20:46):

kind of premium priced oil indexed long-term contracts that were often priced above

(00:20:52):

the prevailing market rate on the dutch title transfer facility which is the the

(00:20:57):

benchmark spot trading venue in the netherlands for for natural gas and the

(00:21:03):

reference price for europe so when when the spot market evolved um the introduction

(00:21:08):

of competition and liberalization it did what it was supposed to do which was to

(00:21:11):

kind of you know more competition increases market efficiency and that kind of

(00:21:16):

classic

(00:21:17):

kind of market economics 101 playbook which is the you know diversity of diversity

(00:21:22):

of sources and breaking down these rigid state structures and and breaking open

(00:21:28):

this closed house of bilateral trade between state-backed actors having lots of

(00:21:32):

dynamic private capital flow in and

(00:21:35):

and then having lots of interesting innovation in financial instruments and futures

(00:21:39):

trading and all the stuff that I monitor in energy flux like that,

(00:21:42):

that did lower prices.

(00:21:43):

So for a very long time,

(00:21:44):

the spot price of gas was on the CTF was much lower than the price that European

(00:21:51):

buyers had to pay gas from under those oil index contracts.

(00:21:54):

And of course,

(00:21:55):

Vladimir Putin did like troll the EU for pursuing this strategy of liberalizing

(00:22:01):

European gas markets.

(00:22:02):

So like, you know,

(00:22:03):

be careful what you wish for and it was it was somewhat prophetic because obviously

(00:22:09):

when the the market conditions changed they changed dramatically so Gazprom went

(00:22:14):

from being one of the most expensive suppliers to being one of the cheapest when

(00:22:19):

the spot market went absolutely crazy during the 2021-2022 energy crisis which of

(00:22:25):

course Gazprom helps to engineer it's worth adding by withholding

(00:22:29):

volumes from the European gas market which it was used to sending and allowing its

(00:22:35):

own gas storage facilities which it owned and controlled in Germany allowing those

(00:22:40):

to deplete so leaving Europe's biggest economy in a really kind of parlous energy situation.

(00:22:47):

During the refilling season of 2021,

(00:22:49):

that was all part of this premeditated campaign to destabilise the European energy

(00:22:55):

market and to weaponise its use of gas,

(00:22:57):

all obviously as a prelude to the full land invasion of Ukraine.

(00:23:03):

so that's a little bit about the background of russian gas and how it's not really

(00:23:07):

like the cheap thing it's always described as being and like the raw the

(00:23:10):

reintroduction of russian gas oh we need our cheap russian gas oh our poor

(00:23:13):

industrials they're all they're all going bankrupt they're all suffering because we

(00:23:16):

don't have russian gas anymore anymore it's like well actually it's not quite how

(00:23:20):

things were and i think the eu policy of like diversifying gas sources

(00:23:26):

or just diversifying energy sources in general but even within gas like having

(00:23:30):

pipelines from algeria global lng supplies having lots of lng terminal

(00:23:36):

regasification capacity and then having lots of trading within the eu of different

(00:23:42):

gas sources i think all of that stuff it's all vitally important isn't it to

(00:23:46):

building resilience into the system you know this kind of single

(00:23:50):

point supplier reliance is um it's just a recipe for vulnerability which can then

(00:23:56):

be exploited for geopolitical advantage and that's another big question that sort

(00:24:00):

of hangs over the russian gas ban because you know there's i think i think there's

(00:24:06):

about 20 30 billion cubic meters per year of gas still entering the eu from russia

(00:24:12):

indirectly through that turkstream pipeline i mentioned

(00:24:15):

And like, you know, how's that going to be replaced?

(00:24:17):

Is it just going to be mopped up by the other kind of dependency which EU has,

(00:24:23):

which is on US LNG?

(00:24:25):

So American liquefied natural gas or Qatari liquefied natural gas.

(00:24:29):

Is it just going to swap one dependency for another or exacerbate the dependency on

(00:24:33):

those two big suppliers?

(00:24:34):

It's difficult to know, isn't it?

(00:24:36):

But it's hard to see there being really that many options.

(00:24:39):

Like who else can really ramp up?

(00:24:41):

supply to uh to meet that demand if of course that demand remains and that's

(00:24:46):

another important kind of part of the story which i won't get into too much but you

(00:24:49):

know european gas demand is on secular decline slope so it's hard to see that the

(00:24:55):

kind of demand profile being particularly resilient for all the topics i mentioned

(00:25:00):

on previous episodes so the outlook is is a bit shaky on that front

(00:25:04):

But yeah,

(00:25:04):

essentially,

(00:25:05):

so the whole gas story and the Nord Stream 2 story is all so bound up in European

(00:25:12):

geopolitics and relationships between the EU and Russia.

(00:25:18):

Bearing in mind everything that's happened in recent years,

(00:25:21):

it's quite understandable for there to be a very strong political consensus across

(00:25:28):

European capitals against resuscitating that dependency on Russian...

(00:25:33):

in particular,

(00:25:35):

I mean,

(00:25:35):

you know,

(00:25:36):

when the gas prices spiked to,

(00:25:39):

what was it,

(00:25:41):

about 300 euros per megawatt hour in 2022 after the invasion,

(00:25:45):

then anybody who was holding oil indexed contracts with Gazprom was able to make

(00:25:50):

just these obscene profits by reselling those same molecules that were priced on a

(00:25:57):

Brent slope into this red hot spot market.

(00:25:59):

The margins were just...

(00:26:01):

phenomenally it's like winning the lottery a million times over every single day

(00:26:05):

and that dual pricing structure was really revealed for what it was you know it was

(00:26:09):

allowed both european gas buyers and gas from itself to sort of manipulate the

(00:26:13):

market and rake in huge war profits during the early months of the war before of

(00:26:17):

course gazprom cut off flows as part of the kremlin's multi-dimensional war

(00:26:21):

campaign against the west and the european in particular

(00:26:26):

So the scars of 2021,

(00:26:28):

2022,

(00:26:28):

they're still very raw,

(00:26:31):

and I don't think anybody's forgotten the pain that was heaped upon consumers,

(00:26:35):

ultimately,

(00:26:36):

by Russia's weaponisation of gas,

(00:26:38):

and all the political fallout from that,

(00:26:41):

because obviously,

(00:26:42):

you know,

(00:26:42):

that...

(00:26:43):

that kind of upsurge in in energy costs that were all rooted from the gas price

(00:26:48):

crisis of 2021-2022 that's all fermented all this discontent among socially

(00:26:54):

deprived communities across europe where you know you've then seen uh you know

(00:27:00):

these kind of de-industrialized forgotten communities just turning into the

(00:27:04):

breeding ground for the kind of populist far right and this

(00:27:09):

really quite kind of worrying trends towards authoritarianism and this neo-populism

(00:27:14):

that's creeping at the edges of European democracy and threatening to undermine it

(00:27:20):

at any given moment.

(00:27:21):

And I think that the energy story is a key element to that trend.

(00:27:26):

And there is one final element I'd like to discuss around the whole kind of energy

(00:27:33):

gas weaponization theme,

(00:27:35):

and it's something that Energy Flux covered in a recent Deep Dive article,

(00:27:39):

and that's how Russian forces are now systematically using the gas weapon in a

(00:27:45):

different way,

(00:27:46):

and that's to destroy Ukraine's ability to produce its own domestic gas resources

(00:27:51):

and weaken Kiev's hand at this critical moment in the conflict.

(00:27:55):

I won't go into that in too much depth,

(00:27:57):

but I just raised that point to kind of underscore why there's so much resistance

(00:28:03):

to this idea of allowing Russian gas back in again and why the ban has been

(00:28:07):

introduced now in the way it has been or is being introduced and proposed.

(00:28:12):

But the Ukraine gas production story, that really is a very separate story to Nord Stream.

(00:28:17):

And it's worth reading as well.

(00:28:19):

So you can read that story in full on the Energy Flux website.

(00:28:23):

Just go to www.energyflux.news and don't forget to sign up for a subscription while

(00:28:30):

you're at it.

(00:28:32):

In conclusion, I'd say that Nord Stream 2's fate, or its likely fate, is probably just a

(00:28:38):

sort of quite sorry end really as a as a kind of stranded asset i mean i think

(00:28:43):

barring just a phenomenal geopolitical u-turn then north stream 2's intact pipeline

(00:28:50):

will probably just gather rust at the bottom of the baltic sea eu ban german

(00:28:56):

opposition sanctions they all leave very little room for a revival and there has

(00:29:01):

been some chatter around repurposing it for hydrogen making it part of europe's

(00:29:06):

hydrogen backbone which

(00:29:07):

I definitely won't get into now,

(00:29:09):

but it's technically possible,

(00:29:10):

but eye-wateringly expensive,

(00:29:12):

and the market really just isn't there,

(00:29:14):

isn't ready for that kind of investment now.

(00:29:16):

So the pipeline's really an 11 billion euro relic,

(00:29:19):

symbol of Europe's sort of energy divorce from Russia,

(00:29:22):

if you like.

(00:29:23):

I'd say the legal and political barriers are thicker than Baltic ice,

(00:29:28):

and the less the peace talks rewrite the rules,

(00:29:30):

then this pipeline's future is,

(00:29:33):

pardon the pun,

(00:29:34):

deep underwater.

(00:29:36):

So, Mark, thank you.

(00:29:38):

What a great question and really enjoyed getting into the weeds of that one.

(00:29:42):

And remember,

(00:29:43):

if you want to have your own energy question answered in depth on the Energy Flux

(00:29:47):

On Air podcast,

(00:29:49):

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(00:29:51):

Head on over to www.energyflux.news.

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(00:29:59):

But if you want to get all of the exciting analysis,

(00:30:01):

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(00:30:02):

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(00:30:15):

And all I can say is go check it out.

(00:30:17):

Thank you for listening.

(00:30:18):

It's been a joy as ever.

(00:30:21):

And I'll see you again next time.