Europe's Stability Depends on NordStream 2: OMV

The completion of Gazprom's Nord Stream 2 pipeline is key for Europe's political stability, the head of Austrian energy firm OMV Rainer Seele told the European Gas Conference January 27. The event is sponsored by the Russian gas exporter and OMV is one of five companies lending money for the project. It is almost complete over a year after it was due on stream. He added that it was bad for investments if approved projects were then ruled illegal.

The US has imposed extra-territorial sanctions on companies involved with laying the pipeline and the European Commission has also changed the regulatory framework, damaging its profitability.

Seele said that Austria, which relies heavily on renewables, needed more dispatchable and lower-carbon generation such as gas to avoid black-outs. Gas kept society and the economy functioning, he said:"We value the partnership of our suppliers." Austria was Gazprom's first gas customer, with supplies beginning in the depths of the Cold War. He also pleaded for an EU-Russia hydrogen alliance, given the availability of infrastructure.

Uniper CEO Andreas Schierenbeck added that even if European gas demand remained no more than stable, import needs were still going to rise as indigenous supplies, mainly from Norway and the Netherlands, fall. LNG deliveries cannot be counted on, as last year showed, he said, while pipeline gas is "definitely reliable." Uniper's strategy is to mix LNG with pipeline gas and underground storage. Uniper is another lender to NS 2. "You do not have to like NS 2 but it is needed," he said in the Q&A session after.

He also said he believed the line would be completed, and Angela Merkel's successor as leader of the ruling CDU Armin Laschet has expressed views setting him also on a collision course with the new US president Joe Biden with his pro-Moscow, anti-sanctions stance. National elections are in September.

The head of Gazprom Export, Elena Burmistrova, told the online event that Russian pipeline gas had flexed up and down, balancing the market as US LNG exports to Europe surged in the first half and then vanished in the second half of last year as Asian prices were more attractive. "This is its strength and its weakness," she said. Russian pipeline deliveries through the new Turk Stream line also had a third of the CO₂ footprint of US LNG imports, she said. And she said that last year, final investment decisions amounting to 100mn metric tons/yr of LNG export capacity had been postponed. 

But buyers seeking price stability had been attracted to the Gazprom electronic trading system, which sold almost twice as much gas last year as the year before. Linking prices to forward month or further out dampened volatility, she said, which improved investor confidence in the fuel. "Last year changed our understanding of the limits of volatility," she said as hub prices in northwest Europe concertinaed.

Gazprom accounted for about a third of the gas imported by the European Union and Turkey last year, supplying about 175bn Russian m³, which are little less in energy terms than standard cubic metres. The two Nord Stream lines will carry 55bn m³/yr each although the already-operational NS 1 has exceeded nameplate by about 9%.