The Russian gas pipeline to EU that has made Trump see red

The Russian gas pipeline to EU that has made Trump see red

Nord Stream 2 will route Russian gas exports away from Ukraine to the EU, boosting Europe's energy security in the process

It is not every day that a decision to grant construction consent in Denmark has global ramifications.

A ruling made today, a short walk away from Copenhagen's meatpacking district, may achieve just that.

The Danish Energy Agency gave its approval for Nord Stream 2 - a 765-mile pipeline that will transport natural gas from Russia to Germany.

Image: Russian energy firm Gazprom has already completed 87% of the pipeline

The pipeline, half of whose €9.5bn cost is being met by the state-controlled Russian gas supplier Gazprom, has already received permission from the governments of Finland, Sweden and Germany. Almost 90% of it has already been built.

Denmark, however, had been holding out.


Nord Stream 2 applied to Copenhagen for permission to lay its pipes in a Danish portion of the Baltic Sea as long ago as April 2017 but the authorities knocked back the application due to concerns over disruption to shipping.

The decision will anger the United States.

It wants to sell its liquefied natural gas to Europe and is concerned about competition from cheaper Russian gas.

Image: Donald Trump has threatened targeted sanctions in response to Nord Stream 2

President Trump has also warned that the project will increase western Europe's dependence on Russia.

Mr Trump said in June this year that the pipeline was a "tremendous mistake" that "really makes Germany a hostage to Russia" and threatened to impose US sanctions against companies involved in its construction.

Mr Trump was not alone in his opposition to the pipeline.

Poland, Latvia and Lithuania, all of which have borders with Russia, are also strongly opposed. Other European countries including France, which obtains 70% of its energy from nuclear and so is not as dependent on imported gas as Germany, has also been wary of the project.

Meanwhile, there have also been concerns that Russia will use Nord Stream 2 as a way of ratcheting up pressure on Ukraine, through which a lot of Russian gas currently finds its way to countries including the Czech Republic, Slovakia, Hungary, Romania and Croatia.

Transporting natural gas to the west via Nord Stream 2, instead of via Ukraine, is likely to cost the latter tens of millions of dollars in lost revenues. The importance of the current pipeline from Ukraine is such that Russian gas had continued flowing through it even after Moscow annexed the Crimean peninsula in 2014.

Image: The Bovanenkovo gas field in the Arctic Circle

Germany has sought to allay those concerns by insisting that Nord Stream 2 - whose chairman is Gerhard Schroeder, the former German chancellor - would only become operative provided Gazprom continued to transport gas via Ukraine.

Angela Merkel, the current German chancellor, is said to have reinforced this point in a meeting with Vladimir Putin, the Russian president, earlier this week.

The delay in granting permission, which was also due to the need to carry out environmental checks, was clearly infuriating Mr Putin. He said earlier this month that, if the Danes continued to refuse permission for Nord Stream 2, the pipeline would simply be built around Danish territory.

He added: "Denmark is a small country which has come under strong pressure and it is up to it whether or not to assert its independence and show it has sovereignty. If they do not [grant permission], there are other routes. It would cost more and hold us up a bit, but I think the project will be completed."

Image: Russia hopes the project will be completed next year

A leaked letter obtained by Reuters earlier this year revealed that, were Nord Stream 2 to bypass Denmark, it would incur extra costs running to €560m, as well as delaying the project by up to nine months.

So today's decision was welcomed with relief by investors in Gazprom. Its shares surged by more than 3% to hit their highest level since August 2008.

Gazprom will not be the only winner. Its partners in the project - Royal Dutch Shell, French gas giant Engie, Austrian oil and gas company OMV, German chemicals giant BASF and the German power company Uniper - have also committed, collectively, billions to the project.

There are still some questions left to be answered.

One is how quickly the pipeline can be completed. The Danish Energy Agency said today that another month would have to elapse before the permit granted to Nord Stream 2 could be used. Nor could Nord Stream 2 itself say today how quickly the Danish section of the pipeline would take to build after that.

But the Russian politician Konstantin Kosechev, who heads the foreign affairs committee in the upper chamber of the Russian parliament, said on social media today: "It looks like the project could be completed within months."

Mr Kosachev praised Denmark's decision to grant permission to the project despite "powerful pressure…from Ukraine to Poland to America."

That leads to the other big question - whether the US president follows through with his threat of sanctions.

Mr Trump has long resented Germany's trade surplus with the US and has threatened regularly to slap import tariffs on German cars.

The president has also been critical of Germany for failing to meet its funding commitments to NATO.

So this decision - if Mr Trump suspects Berlin has been placing undue pressure on Denmark - is likely to make the 70th anniversary NATO summit, due to be held in London just nine days before the general election, a spicy affair.