(Bloomberg) -- A planned natural-gas pipeline, Nord Stream 2, is the latest point of friction between U.S. President Donald Trump and German Chancellor Angela Merkel. At a summit meeting of North Atlantic Treaty Organization members, Trump said the pipeline risks making Germany “a captive of Russia.” He’s not the first American leader to criticize the pipeline project, and the U.S. isn’t alone in its disapproval.
1. What is Nord Stream 2?
It’s a planned new 1,230 kilometer (764-mile) undersea pipeline that will carry natural gas from fields in Russia to the EU network at Germany’s Baltic coast. It will double the capacity of an existing undersea route and cut Russia’s reliance on gas transit through Ukraine. (Russia has been locked in conflict with Ukraine since 2014, when a pro-Russian president there was forced from power and Russia seized the country’s Crimean Peninsula.) Russia’s Gazprom PJSC is overseeing the project with funding from five investors including Royal Dutch Shell Plc and Engie SA, which are providing half of the 9.5 billion-euro ($10.3 billion) in cost.
2. How close is it to being built?
A Swiss unit of Gazprom, Nord Stream 2 AG, has received environmental and construction permits from Germany, Finland and Sweden. It still needs similar approvals from Denmark. (The pipeline would cross the economic zones of those four nations, plus Russia’s.) Dredging work has already started, and the sponsors plan to begin putting sections of pipe on the seabed later this year. It’s due to be complete in late 2019, a target that looks "optimistic," according to Bloomberg Intelligence analysts Rob Barnett and Elchin Mammadov.
3. Why does the U.S. oppose the pipeline?
The U.S. has always been opposed to Nord Stream 2, which it views as Russia’s attempt to solidify its hold on Europe’s energy supply. In March, a group of 39 U.S. senators urged Trump to try to block the project, saying it would make American allies “more susceptible to Moscow’s coercion and malign influence.” On Wednesday, before a meeting with NATO Secretary General Jens Stoltenberg, Trump said Germany made itself "a captive of Russia" by signing "a massive oil and gas deal" that will pay "billions and billions of dollars a year to Russia." Some in the EU have charged that the U.S. is looking to displace Russia in Europe’s gas market to make way for imported gas from America.
4. Could that last part really happen?
It would be a stretch. Gas from the U.S. must be chilled into a liquid and shipped in tankers at a great cost. Russia’s supplies mostly arrive in Europe through a network of pipelines that have been in place for decades -- and at a much lower price. U.S. gas is more likely to end up in Asian markets, where prices are higher.
5. Who else opposes the pipeline?
Poland, Slovakia and other countries that host existing pipelines -- and collect transit fees as gases passes through them -- are also opposed. They warn that the link will give Russia the ability to bypass countries that fall out of its favor, including Ukraine. Poland’s foreign minister, Jacek Czaputowicz, suggested that Trump has a point that "some countries are too close” to Russia and that the gas pipelines under the Baltic Sea contribute to the funding of Russia’s military. Lithuania’s president, Dalia Grybauskaite, said her nation has always viewed Nord Stream 2 "as geopolitical, politically motivated, having no economic justification and also binding hands for some European countries to pursue a free energy policy."
6. How do Russia and Germany respond to the criticism?
Russian President Vladimir Putin -- with whom Trump will meet on July 16 -- has said Trump’s complaints are motivated by his wish to promote "the interests of his business" to sell American liquefied natural gas to Europe. Merkel has defended the "economic aspects" of Nord Stream 2. She also has said she wants to make sure Ukraine isn’t "fully cut off from transit traffic." After Trump’s comments at the NATO meeting, Germany’s defense minister, Ursula von der Leyen responded in a BBC interview, "We have an independent energy supply, we are an independent country, we are just diversifying.”
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