North Stream 2 is a divisive project that will determine the future course of the European energy system.
Its implementation will have a direct impact on countries in Eastern and Central Europe, but will also affect the French and Italian energy markets.
1. Oil and gas remain critical components of Europe’s energy sytem.
The European energy system has already reached a turning point. It is becoming increasingly clear that any further reduction in oil and gas production in the North Sea will jeopardize Europe’s energy security. The only way to solve this problem is to include Russia in the long-term energy supply strategy.
If Europe fails to integrate Russia into the continental energy supply system, the inevitable result will be an energy shortage in Europe. This hunger for energy cannot be satisfied exclusively by American liquid gas for the next 20 to 30 years.
2. Competition between U.S. and Russian LNG suppliers is intensifying.
U.S. natural gas suppliers have a clear interest in increasing their LNG supply to Europe at the expense of Russian natural gas supplies. It is known that US LNG cannot compete with Russian natural gas price-wise. Diplomatic steps are therefore being taken to convince the European Union and Germany in particular to reconsider their approach and terminate the Nord Stream 2 project.
US natural gas suppliers need the European natural gas market as outlets. US hydrocarbon fuel producers need Europe to maintain the profitability of Texas oil refineries. The demand for primary energy in the United States for the coming years is covered. If the European Union does not purchase these quantities, other natural gas products produced in these refineries may no longer be profitable. They are a by-product of the production process. But if these refinery products are not sold, they make the US downstream business less profitable.
3. The Geopolitics of Energy Markets: Nord Stream 2
Natural gas exports from Russia are relatively cheap, reliable and contribute to geopolitical stability between Russia and the European Union. On the other hand, Germany and the European Union maintain very close relations with the United States, and this relationship is as crucial to European energy security as Europe’s relationship with Russia.