Denmark remains last to approve Russia's Nord Stream 2, Sweden finds "no reason" to ban the pipeline

Denmark remains last to approve Russia's Nord Stream 2,  Sweden finds
Sweden has signed off on construction of the Nord Stream 2 gas pipeline construction leading Denmark as the last hold out / Wikicommons
By bne IntelliNews June 13, 2018

Denmark is the last hold out in Europe, yet to give permission for the construction of the controversial Nord Stream 2 pipeline after the Swedish government became the latest EU country to sign off on construction permissions for the pipeline that will carry Russian gas from the Yamal peninsula under the Baltic Sea to Germany.

The gas pipeline runs through the Swedish economic zone in the Baltic Sea and the Minister of Entrepreneurship and Innovation Mikael Damberg told the press on June 7 that Sweden sees “no reason” for refusing permission for the pipeline’s construction.

Germany has already signed off construction permits in for construction of the terminal in its territory and broke ground on the work in April. However, several EU countries, lead by Poland, have strongly objected to the pipeline, which by passes their countries and will effectively bring to an end Ukraine’s five-decades role as a transit country for Russian gas headed to western Europe.

"The government has given permission for the Nord Stream 2, to lay a gas pipeline in the Swedish economic zone in the Baltic Sea, Sweden just cannot reject this project," Damberg said as cited by Tass.

Damberg emphasized that the Swedish "government has a negative attitude towards the project as a whole, since there is a risk that it contradicts the goals of the [EU energy policy] Energy Union, and also because of the consequences for Ukraine as a transit country for Russian gas, because of significant economic losses, which could arise." He believes that the EU "should reduce dependence on Russian gas" as an instrument of "political pressure."

With green lights from Swedish Finland and Germany, Denmark is the last obstacle for the Nord Stream 2 pipeline that is being built by Russia's natural gas giant Gazprom and the last country on the pipeline's route to not have issued a construction permit

Poland continues to actively lobby against the pipeline in EU, initiating anti-trust proceedings against Gazprom and pushing for tougher opposition to the pipeline in the European Commission.

More recently the pipeline has been threatened in Switzerland, where bailiffs reportedly visited the office of the Nord Stream company in the canton of Zug in Switzerland as part of execution of the $2.6bn decision of Stockholm Arbitration in favour of Ukrainian Naftogaz

Gazprom commented that it had not received an official notification about the start of enforcement of the decision of the Stockholm court’s verdict. But the involving the shares of Nord Stream AG and Nord Stream 2 AG would expose the pipeline to additional political risk and is likely to upset its European partners such as Shell, Engie, Uniper, OMV and Wintershall that have already put up considerable amount of funds to finance the construction.

On June 7 Gazprom said that it filed an appeal to the Swiss court against the actions bailiffs, and will file similar appeals in Dutch courts, which also reportedly acted on behalf of Naftogaz.

The construction is scheduled to be completed by the end of 2019 or early 2020 and the pipeline will carry 50 billion cubic meters of gas a year, about a quarter of Russia’s entire export of gas to Europe a year.

While Russia will be obliged to continue to deliver gas to Europe via Ukraine, which currently accounts for half of Russia’s gas exports west, under the terms of the recently Stockholm arbitration court decision, this amount could be cut to a mere 5bcm a year. In this case Ukraine will forego some $3bn a year in lost transit revenues, which with the delicate state of Ukrainian finances, would be a heavy blow for the budget.