Nord Stream 2 scrapped: What does Germanys actions mean for UK gas prices?

Russia could ‘put foot on throat of Germany’ says expert

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The German Chancellor Olaf Scholz has confirmed that the certification of the Nord Stream 2 project cannot go ahead, following the latest Russian belligerence in disputed regions of Ukraine. The pipeline, which was awaiting approval from the German Government, will not carry gas from Russia to Europe as the Chancellor withdraws a key document needed for the pipeline to be put into action.

He told reporters in Berlin that his government was taking the measure in response to Russia’s actions in Ukraine.

Chancellor Scholz said that over the course of the day, the EU would conclude sanctions and that the bloc could be trusted to act quickly.

He told reporters at a press conference: ”We have prepared for this moment very carefully. It won’t take very long, because we’re not starting from scratch.”

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What is Nord Stream 2?

Nord Stream 2 is a 1,200km pipeline which, when approved, will take gas from the Russian coast near St Petersburg to Lubmin in Germany.

The pipe runs parallel to the existing Nord Stream pipeline, which has been in operation since 2011.

The project would double the amount of gas flowing from Russia to Germany and would bypass Ukraine, owing to it running along the bed of the Baltic Sea.

Construction of the pipeline is complete and it is ready to flow Russian gas into Europe.

What does this mean for UK gas prices?

The UK is not dependent on gas for Russia, so supplies to the UK are unlikely to be impacted.

However, international wholesale gas prices will be impacted – meaning prices will likely rise even in countries like the UK which won’t be using the pipeline even if and when it is eventually certified.

Global stocks fell as a result of the announcement and oil prices rallied, with Brent crude rising more than three per ent to close in on $100 per barrel – topping a seven-year high.

For now, the energy price cap is solidified in price until August 2o22, with any price changes being implemented from October.

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Why is Nord Stream 2 controversial?

The project has long been criticised by the US and some European countries who argue that it increases Europe’s reliance on Russian energy supplies.

The US and UK, along with Russia’s neighbours Poland and Ukraine, strongly oppose Nord Stream 2, citing a potential stranglehold it could place on Europe.

Ukrainian president Volodymyr Zelensky has said Nord Stream 2 is ”a dangerous political weapon”.

Boris Johnson has expressed a similar sentiment, saying Europe needs to snip the drip-feed into our bloodstream from Nord Stream”.

The USA is also against the pipeline and has even taken steps to block its development by placing sanctions on companies involved in the project.

Former Chancellor Angela Merkel was pro the pipeline despite the opposition, and Germany imports 35 percent of its gas from Russia without Nord Stream 2 already.

However, there has been longstanding tension in German politics over the approval of the pipeline, again citing concerns over the control such a project hands to President Putin’s Russia.

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