Innovative Energy Consultancy Ltd
Innovative Energy Consultancy Ltd

US and Germany Reach Deal Over Russian Gas Pipeline

A deal has been struck between the US and Germany to allow completion of the controversial $11 billion Nord Stream 2 pipeline.

The nearly complete 1,230km (764 miles) pipeline under the Baltic Sea has been a long-standing point of contention between the otherwise aligned regions. The agreement, announced on Wednesday, aims to invest 200 million euros in energy security in Ukraine amid fears that Russia may try to blackmail Ukraine, with the country standing to lose $3 billion a year in gas transit fees.

A senior State Department official said, “should Russia attempt to use energy as a weapon or commit further aggressive acts against Ukraine, Germany will take action at the national level and press for effective measures at the European level, including sanctions to limit Russian export capabilities to Europe in the energy sector.”

The official said the US and Germany are “resolutely committed to the sovereignty and territorial integrity” of Ukraine and therefore, consulted closely with Kyiv on this matter.

Poland also opposes the construction of the pipeline, claiming the project threatens the security of central and eastern Europe.

However, Russia continues to advocate for the project, assuring leaders it will be commercially beneficial for all.

The agreement reached this month saw the US and Germany promise Ukraine $50 million in green energy technology credits and a guarantee of repayment for gas transit fees that it will lose by being bypassed by the pipeline through 2024.

Nevertheless, according to Stephen Sestanovich, a US Government official, “in the years that Nord Stream 2 has been discussed and now all but finished, energy markets have changed, and it’s become much harder for Russia to hold European countries hostage – there are just too many alternative sources of energy.”

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