Nord stream 2:

Russia to
Germany

Prof. Aude Pommeret

Master 1 ESBC-SOLEM 2021/2022

Tayyar Hasanov
Hayssam Barakat
Nader Koubaytri
Nofal Aghayarli
Overview
• Introduction
• Negative factors
• Pareto efficiency?
• Germany insists Nord Stream 2 will not threaten EU gas supply
• U.S Republicans Sanction
• Ukraine Pledges to Continue Fight
• Leading Energy Companies Are Strongly Committed to Implementing the Project
• What Financial Investors Say about Nord Stream 2
• How can Nord Stream 2 be stopped?
• Internal gas production in EU-2016
• Analyzing the economic benefits of the Nord Stream 2 project
• Gas demand in EU
• Analysis of price change
• Analysis of market
• Environment
• Conclusion
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Introduction
• The major countries in the project – Russia,
Germany, Finland, Sweden.

• Pipeline power is 55 bln.m3/year

• The project has a wide range of effects on

many different countries and economic
sectors.

• 1230 kilometers

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 Negative factors in EU

• The Netherlands, so far, an important source of

gas for many European countries, has decreased
extraction of gas due seismic problems.

• Denmark, too, is facing a significant fall in

production volumes, as its major gas producing
field, Tyra, has had to reduce output for
geological reasons.

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Pareto efficiency?

1 Tanker ~ 260,000 m3 1 Pipeline = 55 bln.m3/year

55 bln.m3/year = 211.000 tankers Constant supply
31,260 JOBS
Price:
Transportation cost + 478€ / 1000 m3 Price depends on contract – 500-800€ / 1000 m3

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 Germany insists Nord Stream 2 will not threaten EU gas supply

The U.S. President Joe Biden reconfirmed

the earlier decision of his administration
not to sanction the company in charge of
building Nord Stream 2.

President Joe Biden and German Chancellor

Angela Merkel earlier this year reached an
agreement that allows the pipeline that will take
Russian gas to Germany to proceed.

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• The controversial project, which began in April 2018, has
for years been opposed by both Ukraine and the United
States.

• Ukrainian President Volodymyr Zelenskyy has described

the new pipeline as a powerful geopolitical weapon for
Russia.

• "Ukraine will fight against this Russian political project

until and after its completion and even after the start of
gas deliveries," Kyiv said in a statement

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Leading Energy Companies Are Strongly Committed to Implementing the Project

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What Financial Investors Say About Nord Stream 2

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Gas demand in EU until 2050
7000
After a period of significant decline 5754 5781
6000
5119 5011 4974 5006 4798 4904 5089 5103 4893
since the financial crisis of 2007/8, 5000
2120 2249
4000
1661 1575 1554 1760 1684 1880 2064 2054 1835
European gas demand has not yet been

TWh
3000

able to fully recover. At its peak in 2010, 2000

3458 3634 3532 3436 3420 3246 3114 3024 3025 3049 3058
1000
total gas demand amounted to some 0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
5,781 TWh gcv, and in 2015 had fallen Household,commercial,industry, transport Power and heat Total domestic demand

to 5,010 TWh gcv.

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Internal gas production
in EU-2016 LNG

• The only areas where production might

increase are in Poland and Cyprus.
• Indigenous production is expected to fall by
almost two-thirds,
• EU will need to import more gas from external
sources…
• New sources of supply include some 100 BCM
of spare production…Russia, and large,
untapped quantities in the Caspian region.

odorless Non-toxic
colorless Non-corrosive 13
Analyzing the economic benefits of the Nord
Stream 2 project
Any economic activity, such as setting up a business, making a capital investment or purchasing a service from
established providers will create an impact on the local economy and business eco-system. In this case, the
aim is to understand the effects of the investments made by Nord Stream 2 to build the two new pipelines
through the Baltic Sea…Economic Impact Analysis.

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Analyzing the economic benefits of the Nord
Stream 2 project
Economic Impact Analysis
Examines the effect of an economic event on the economy in a specified area. It studies these effects in terms
of wealth creation (total economic output and value added/GDP) and number of employment opportunities
created, including the value of wages and salaries earned.

Results of economic impact analysis

It should be noted that the effects are different
depending on the economic/industrial structure of
the country in question and the relative cost of labor…
For example, within the EU, any investment will have
a larger impact in Spain (which has a lower relative
labor cost), than in Germany.

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 Analysis of price
change
Average Price in €
Gas’s price depends on:
• Quantity of gas in storage
• Weather
• Mining power
Average price
690€
In 2020 Stream-2 still under construction :

1000 m3 LPG = 124 €

124 €
In October 2021 Stream-2 was already built :
Supply

Gas storage in % 1000 m3 LPG = 690 €

10% 80%
Why was the price increased after building of pipeline?
1 Market failure ?

2 Shortage of gas ?
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 Analysis of market
Supply and Demand in 2016 and 2020
6000

4992.5 4974
5000

4000

3000
TWh

2143.2 2098.8
2000

1000

0
2016 2020
Supply Demand

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Environment

Advantages Disadvantages
• Carbon emissions reduction goals • Global warming
• Germany – and the EU – into fossil
fuels “for decades.”
• Detrimental effects on ecosystems

Source: Clean Energy Wire Source: bbc.com

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Conclusion
 55bcm/year
 Russia, Germany, Denmark, Finland, and Sweden
 Over 30,000 jobs

 It clearly demonstrates that this is an international project impacting many more countries than those directly
involved at the two landfalls of the pipeline.
 The results of the analysis show a wide range of effects of this large infrastructure investment, affecting many
different countries and economic sectors.
 Additional economic benefits are also likely to arise from the presence of additional competitively priced gas to the
European economy and lower decarbonization costs as a result of lower gas prices competing with oil and coal –
these could be the subject of separate studies further on.

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