Shareholder Agreement Signed on Expansion of Nord Stream, Increasing Russian Gas Deliveries to Western Europe
As was reported on August 31 by Russian media outlet Kommersant, Gazprom signed on September 3 a binding shareholder agreement on Nord Stream‑2 (a major expansion of the existing natural gas pipeline connecting Russia with Germany) at the Eastern Economic Forum taking place in Vladivostok. The Nord Stream‑2 project aims to add two additional gas pipelines to the existing Nord Stream pipeline, doubling its capacity and diminishing the need for Gazprom to utilize other avenues (including its pipelines traversing Ukraine as well as other Central and Eastern European countries) to deliver natural gas to the rest of Europe. Nord Stream‑2 could be completed in a much quicker timeframe than other alternatives being pursued by Russia, including Turk Stream, but needs to raise $11 billion to pay for the project.
According to the report Shell, OMV, E.On and Wintershall will each get a 10% stake in the project company, while France‘s Engie would receive a 9% stake. Gazprom will reportedly receive the remaining 51% ownership of the project. The information regarding the planned signing of a shareholder agreement later this week was reportedly obtained from sources close to the negotiations.
Just hours after the initial report, another Russian media outlet Sputnik denied that such a signing was planned, citing a statement from Kremlin spokesman Dmitry Peskov. While Peskov did not rule out a signing, he was quoted as saying, ‘‘‘Such a signing is not planned.‘ That turns out to have been false.
This agreement represents a major, worrying milestone in Russian efforts to make this pipeline expansion a reality, contractually incentivizing these major European companies ‘‘‘ and, in certain instances, their country stakeholders ‘‘‘ to ensure that the project moves expeditiously toward implementation, despite the harmful strategic consequences for the continent. In short, much of Europe‘s efforts to diversify away from weaponized Gazprom gas deliveries would be needlessly and knowingly undone. That said, Russia faces certain obstacles, such as the present limitation on the amount of gas that the German pipeline, termed Opal, is prepared to take from the Nord Stream pipeline, which is presently capped at 50% of its capacity (per EU regulations). Efforts are underway, however, to get this limit removed.