EU Parliament calls for Nord Stream 2 halt, more sanctions

Author: Diane Pallardy

2020/09/18

LONDON (ICIS)--A resolution passed by the European Parliament on Friday called for the reinforcement of existing EU sanctions against Russia and to halt the Nord Stream 2 pipeline.

This resolution comes as a reaction to the recent poisoning of Russian citizen Alexei Navalny by a chemical agent from the Novichok group.

This is a chemical weapon that can be developed only in state-owned military laboratories, but should it leave those premises this would represent a breach of Russia’s international legal commitments, the resolution states .

The text of the resolution was passed by 83% of the EU Parliament. But for such sanctions to be implemented the European Council, which includes the leaders of all EU member states, has to approve them unanimously.

Earlier this week, EU high representative Josep Borrell said that sanctions against Nord Stream 2 do not fall within the EU institutions’ remit. “This is something that is outside of the possibilities of the European institutions. […] the European Commission has never shown a lot of enthusiasm about this pipeline […] But it is something that is up to the Member States that have been pushing for this infrastructure to be built,” Borrell said.

NORD STREAM 2

The Nord Stream 2 gas pipeline has long divided the bloc. Germany’s Uniper and Wintershall, France’s Engie, Austria’s OMV and the Netherlands’ Shell are responsible for 50% of the €9.5bn project, making Germany, France, Austria and the Netherlands the members states least likely to agree to halt the project. On the other hand, Poland and the Baltics have long opposed to the project, which they say will increase the bloc’s reliance on Russia. They are more likely to push to include the pipeline in potential future sanctions.

The pipeline will double Russia’s direct pipeline export capacity to the bloc to 110 billion cubic meters (bcm)/year. This is over half of what Russia sent to Europe in 2018 and 2019 and intends to keep sending until 2030. Russia provides around a third of the EU’s gas supplies, which makes Russia the bloc’s top supplier and the EU Russia’s largest export market. This means the Nord Stream 2 route is crucial for Russia as it allows it to rely less on transit routes like Ukraine, with whom it has a long history of political disagreements.

The existing twin pipeline, Nord Stream, has been running over its 55bcm/year nameplate capacity since 2018. From next year, Russia’s booked capacities on the Ukrainian transit corridor will drop from 65bcm to 40bcm/year. This indicates Nord Stream 2 is likely to be optimised like its existing twin.

In late December 2019, US sanctions stopped the construction of the pipeline, which is currently 93% built. Washington has threatened to put more sanctions on the project and its EU investors earlier this year .

NEXT STEPS

The EU has so far signalled readiness to consider sanctions if Russia would not conduct a transparent investigation in full cooperation with the Organisation for the Prohibition of Chemical Weapons, the European Council told ICIS.

The EU foreign ministers will jointly assess if such cooperation is happening and if Russia’s response meets their expectations on 21 September. The heads of the member states will also assess the situation at their summit on 24 and 25 September.

Any decision to impose sanctions has to be preceded by political agreement by the Member States. Then the national experts start discussing the extent, type and scope of the sanctions. Once they reach unanimous agreement, the sanction text goes to the Council for adoption and requires unanimity.