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Press review: Washington intends to drag on Ukraine conflict and US, Iran near nuke deal

Top stories from the Russian press on Thursday, August 25th

Izvestia: Germany does not plan to dismantle Nord Stream 2

There are currently no serious discussions in Germany about the possibility of dismantling Nord Stream 2, the ruling Social Democratic Party of Germany told Izvestia. Recently, Polish President Andrzej Duda urged for the pipeline to be decommissioned. Germany, on the other hand, from time to time states the need to run the project for some time to overcome the energy crisis. Experts interviewed by Izvestia believe Berlin will not go for the pipeline’s deconstruction in any case due to technical and legal difficulties.

Timon Gremmels, coordinator for energy policy of the Social Democratic Party faction in the Bundestag, told Izvestia that the federal government is not seriously discussing the project's termination. However, he said that due to Russia's actions, the project will not be put into operation for an indefinite period, and possibly never at all.

Leading analyst at the National Energy Security Fund Igor Yushkov told Izvestia that Germany would not agree to cancel the project due to technical and legal issues. "The Europeans have long vilified Nord Stream 2, transforming it from a business project into a symbol of Russia. Poland continues this rhetoric, but there is nothing behind Duda's words," the expert said.

According to him, if the project is abandoned, Germany will be forced to pay compensation and start legal proceedings for pipes belonging to Russia. This may cost not even tens, but hundreds of millions of dollars, Yushkov believes.

At the same time, the expert emphasized that in the case of disassembly, Germany will not compensate participating enterprises (Wintershall Dea, Engie, OMV, Shell and Uniper).


Nezavisimaya Gazeta: US expects to drag out Ukrainian conflict for years

US President Joe Biden announced an unprecedented military aid package to the tune of $2.98 bln for Kiev. The new amount, which was timed to coincide with Ukraine's Independence Day on Wednesday, is the largest in Russia's six-month special military operation. According to experts interviewed by Nezavisimaya Gazeta, the White House believes Ukraine could win and may wish to prolong the fight.

Previous transfers of weaponry and ammunition were made to fulfill Ukraine's immediate requirements, but the latest $2.98 bln will be used to "strengthen defense" in the medium and long term. The latest aid package will enable Ukraine to purchase air defense systems, artillery systems, ammunition, and drones.

"Expanding US military support to Ukraine has, strangely, slowed the pace of the Russian special operation," Associate Professor at the Faculty of World Politics of Moscow State University Alexey Fenenko told the newspaper.

The analyst believes that the Biden administration maintains that military support to Ukraine is part of its information campaign against Russia. "The Americans' thinking is simple: if Ukraine continues hostilities and receives American weaponry six months after the start of the special operation, Russia will increasingly question the effectiveness of its military forces. This can be utilized to build a new Russian opposition capable of paralyzing the country, Washington believes," the expert emphasized.

In any case, Fenenko argues that the US thinks Ukraine will be able to weather the conflict for a long time and survive after the hostilities. According to the expert, the question is what kind of Russian victory "on the ground" may persuade the White House that helping Kiev is futile.


Nezavisimaya Gazeta: US, Iran one step away from concluding nuclear deal

Israel considers the current version of the Joint Comprehensive Plan of Action (JCPOA) to be unacceptable and will resist the Islamic Republic's efforts to develop a nuclear bomb, according to Israeli Prime Minister Yair Lapid. The statement was made against the backdrop of clear progress along the nuke deal negotiations, Nezavisimaya Gazeta writes.

Iranian Foreign Minister Hossein Amir-Abdollahian provided Tehran’s reply to the EU’s proposals. It was evaluated and, in general, approved in the United States.

The EU's JCPOA plans include easing sanctions on 17 Iranian bank and 150 business entities. Most crucially, Iranian oil exports will be allowed. This will help ease some challenges caused by the Russian supply embargo. By the end of 2022, no Russian oil will be purchased in the EU. Under these conditions, Lapid criticized the upcoming deal, claiming that Israel is not prepared to live with a nuclear danger.

PM Lapid’s remarks were partially pre-election in nature, since Israel will hold a parliamentary vote in the fall, the newspaper writes. Nonetheless, as RIAC expert Kirill Semenov pointed out, Israel has a clear strategy: it is continually trying to throw new ideas at the White House in order to prevent the nuclear deal from being completed. And there is a strong sense that the end is near.

However, the expert cautioned against being overly optimistic. "According to open data, it appears that the major issues have been resolved. This is not, however, the first time such a scenario has happened. At the time, it also seemed that one final step was needed to restore the nuclear deal. But then one of the sides puts forward new demands, and difficult negotiations begin again," Semyonov said.


Kommersant: Shell may lose long-term contract with Sakhalin-2

The new Russian operator of the Sakhalin-2 project, which offered foreign customers the same terms for contract renewal, began cutting off supply to those who did not accept it. According to Kommersant, as a result Shell may lose its volumes from Sakhalin. The company has a long-term contract for 1 mln tonnes per year. However, it appears it will not re-sign the agreement with the Russian operator because it has already announced its withdrawal from the project.

Sakhalin-2 has 12 more long-term contracts. Japan’s JERA, Tokyo Gas, Kyushu Electric, Toho Gas, Tohoku Electric, Hiroshima Gas, Osaka Gas, and Saibu Gas together have contracts for 5 mln tonnes of LNG per year. JERA and Tokyo Gas, which have 2 mln and 1.1 mln tonnes per year, respectively, have already inked contracts with Sakhalin Energy. Other Japanese companies are expected to do the same. Other major buyers are South Korea’s Kogas (1.5 mln tonnes per year) and Taiwan’s CPC (0.75 mln tonnes). According to Kommersant's sources, these companies will also sign contracts with a new operator in order to keep the LNG price low due to the oil peg in the long-term contract formula.

Shell's position on the deal, according to Igor Yushkov, an expert at the Russian Government's Financial University, is logical, considering that the corporation announced its withdrawal from Russia in February and is under pressure from Western countries. At the same time, the Japanese participants in Sakhalin-2 enlisted the help of their government. According to the expert, their position is primarily explained by the profitability of the supply contract with Sakhalin-2. He emphasized that because Japanese companies were participating in the project at an early stage, they were able to obtain LNG at a very low price. Furthermore, finding a replacement for Sakhalin volumes will be difficult for Japan.



Vedomosti: EU fertilizer producers start suspending factory operations due to surging gas costs

Due to a significant increase in gas prices and production expenses, the Lithuanian fertilizer facility Achema will halt operations on September 1. The company’s top manager noted because of rising gas prices, the company's fertilizers are becoming less competitive than products from Russia and the United States. According to Vedomosti, this could lead to a critical market imbalance this winter.

Boris Krasnozhenov, Head of Securities Market Analytics at Alfa-Bank, noted that Europe is "the most expensive region" for nitrogen fertilizer production. Sergey Grishunin, managing director of the National Rating Agency, concurs that their production in the EU "does not make sense" at current gas prices.

"If European manufacturers do not receive state backing, there may be a catastrophic shortage of nitrogen fertilizers in winter and spring," Krasnozhenov believes.

According to a source in one of Russia's fertilizer companies, the current scenario in the EU would cause a market imbalance while simultaneously supporting prices. According to the source, despite the Russian government's export limitations, Russian enterprises will be able to increase shipments to the high-margin EU market if the domestic market is saturated. "However, difficulties with insurance, banking operations, and logistics must also be resolved, which requires European regulators' participation," the source added.



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