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Fitch sees launch of Nord Stream 2 at full capacity by New Year’s

Dmitry Marinchenko believes that the project’s completion may be regarded as Russia’s geopolitical triumph

MOSCOW, September 10. /TASS/. Nord Stream 2, whose construction completion was reported by Gazprom early on Friday, may start functioning at full capacity by the end of this year as European gas storage facilities are undersupplied and gas prices have hit record highs, Dmitry Marinchenko, Senior Director, EMEA Oil and Gas Lead Analyst from Fitch told TASS.

"So far, the project cannot work at full capacity due to restrictions related to the European Gas Directive. However, I do not rule out that the gas directive may still be lifted to encourage Gazprom to maximize gas pumping into gas storage facilities and exports amid the market deficit and super-high prices. Theoretically, it would enable the pipeline to start operating at full capacity by the year’s end," he said. The total capacity of the gas pipeline is 55 bln cubic meters per year.

The lead analyst also believes that the issue of the pipeline’s certification may probably be resolved relatively quickly. "That is a matter of weeks, hardly months," he said.

Marinchenko believes that the project’s completion may be regarded as Russia’s geopolitical triumph.

"The completion of Nord Stream 2’s construction is Moscow’s geopolitical victory, the project has been finalized despite the negative attitude towards it from the European Commission, a number of European countries and the US. Germany’s unwavering stance has helped as Berlin, like Moscow, has always stressed that the pipeline is a commercial, not a political project," he pointed out.

Moreover, the launch of the project will make it possible to reduce the dependence of Russia and Europe on Ukraine’s transit of gas. Nevertheless, this transit itself will continue functioning at some scale, the expert added.

However, down the road, the question of maintaining this route may arise, which is related to the energy shift process, he noted. "In the long term, Europe’s demand for gas may start waning. Meanwhile, less efficient routes, primarily the Ukrainian one, will remain the first without gas," Marinchenko noted.

That said, by pouring investment into the construction of pipelines and the development of the resource base, Russia is actually shouldering the risks of the energy shift. "Europe has its options open, if the demand for gas decreases as a result of the development of renewable energy sources, it will simply reduce its purchases," he explained.

Nord Stream 2’s construction through the Baltic Sea started in September 2018. The endeavor was planned to be completed by the end of 2019. However, during its implementation, the project came under pressure from the US and a number of European countries. Work was suspended in December 2019 after the Swiss-based Allseas company abandoned its pipe-laying operation due to Washington’s possible sanctions back then. In December 2020, the construction of the pipeline resumed.

The United States and Germany reached an agreement on Nord Stream 2 on July 21. Particularly, Washington admitted that sanctions would not stop the implementation of the project, whereas Berlin committed itself to addressing the extension of Russian gas transit via Ukrainian territory. Meanwhile, the American authorities reserve the right to take steps if Russia uses energy as a geopolitical weapon in Europe and demonstrates aggression against Ukraine, the US Department of the State claimed.