(Bloomberg) — Germany won’t need additional gas flows this season, giving Chancellor Angela Merkel and Russian President Vladimir Putin another reason to bide their time on the controversial Nord Stream 2 pipeline.
After two warm winters and the coronavirus pandemic, demand for the fuel used for heat and power generation is sagging across the continent. Supplies remain abundant, with U.S. cargoes of liquefied natural gas returning to Europe. Benchmark gas prices remain below their 10-year average at the start of the period for peak consumption.
Those metrics may inform how Putin and Merkel respond to Poland’s decision last week to slap a record $7.6 billion fine on the pipeline’s sponsor, Gazprom PJSC. Berlin was silent on the matter, and Russia said only that Poland aligned itself with the U.S. on the issue. For now, there’s no reason to rush ahead with the long-delayed 1,230-kilometer link under the Baltic Sea.
“There is no urgency now for Nord Stream 2 as the existing pipelines and LNG should provide enough gas for the months to come,” said Richard Morningstar, founding chairman of the Atlantic Council’s Global Energy Center and a former U.S. ambassador to the European Union.
Nord Stream 2 will run parallel to an existing pipeline by the same name and will double capacity of the route from Russia under the Baltic Sea into Germany. Merkel allowed it to go ahead as a commercial project that would shore up fuel supplies to heavy industry including BASF AG. Russia and Gazprom started promoting the link in 2012, saying additional flows will be needed needed by the mid-2020s.
The U.S. has opposed the pipeline from the start, saying it will deepen Europe’s dependence on energy supplies from Russia. Those arguments gained traction when Putin ordered