: Forbes: Mounting political risks threaten Russia's new European gas pipeline

18:12 Mar. 27, 2016

Forbes: Mounting political risks threaten Russia's new European gas pipeline

Hungarian Prime Minister Viktor Orban, center, walks with his delegation as he leaves an EU summit in Brussels , March 18, 2016.  (AP Images)

Eight European leaders sent a letter of protest expressing opposition to Russia's planned Nord Stream-2 gas pipeline

It was revealed last week that eight European leaders – representing Poland, Hungary, Lithuania, Latvia, Estonia, the Czech Republic, Slovakia and Romania – sent a letter of protest to European Commission President Jean-Claude Juncker expressing opposition to Russia's  Nord Stream-2.

The letter, dated on March 7, warned that Nord Stream-2 would have "potentially destabilizing geopolitical consequences," undermine the energy security of Central and Eastern Europe, and detrimentally impact Ukraine.

On March 21, 2016 the prospective shareholders in the Nord Stream-2 consortium issued a rebuttal.

The reply, which can be found on the consortium's website, argues that Nord Stream-2 is consistent with EU climate goals and will enhance Europe's long-term energy security by providing an alternative gas supply route that avoids the unreliable transit state of Ukraine.

Read also Gazprom, Edison and DEPA sign memorandum on gas supplies over Black Sea bottom

The rebuttal further asserted that the project will improve internal market competition by increasing liquidity in North-West European gas hubs with the delivery of additional gas supplies at a time when North Sea gas production is declining and European gas demand is recovering.

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The consortium's most salient point, and the one that gives the shareholders the most confidence, is that there is clear legal precedent under EU laws and regulations that Nord Stream-2 is not subject to the Third Energy Package (TEP) since it is an import pipeline from a third-party country (non-EU member). The EU is currently assessing the applicability of the TEP to the offshore section of Nord Stream-2.  The TEP would require the unbundling of ownership and control of gas transmission and distribution as well as mandate non-discriminatory third-party access to pipeline capacity.

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