By Irina Slav
President Trump continued his relentless offense against Russian gas in Europe this week by threatening to slap sanctions on Germany for its equally relentless support of the Nord Stream 2 pipeline project that will increase the flow of Russian gas into Europe.
Bloomberg quoted the U.S. President as saying “We’re protecting Germany from Russia, and Russia is getting billions and billions of dollars in money from Germany,” during his meeting with his Polish counterpart Andrzej Duda in the White House.
Threats of sanctions have come from Washington earlier as well, targeting European companies involved in the Nord Stream 2 project, including supermajor Shell, Austria’s OMV, and German Wintershall and Uniper, along with French Engie.
The U.S. argument is that an expansion of the existing Nord Stream pipeline would deepen Germany’s—and Europe’s—dependence on Russian gas at a time when they should be reducing this dependence and diversifying into other sources, including U.S. LNG. The German argument, on the other hand, is that there is a market for any gas as long as the price is right.
Now, Reuters quoted Trump as saying the pipeline project would make Germany “a hostage of Russia if things ever happen that were bad.”
In the past, Russia has suspended the flow of gas through Ukraine because of pricing disputes between the two that have dragged on for more than a decade now. There has not been a major disruption in the European supply of Russian gas but European officials are uncomfortable with the degree of dependency of the continent on Russian gas: Gazprom’s market share in Europe last year hit 35 percent.
In response to Trump’s statement, Bloomberg quoted Kremlin spokesman Dmitry Peskov as saying it was “nothing other than blackmail and a form of unfair competition.”
Earlier this month, Energy Secretary Perry, on a visit to Europe, said U.S. LNG was competitive to Russian pipeline supplies: “This idea that somehow … LNG can’t compete with pipelined gas is just false,” Perry said on the sidelines of the conference, as the United States authorized additional volumes of LNG exports, calling its LNG “freedom gas.”
By Irina Slav for Oilprice.com