Energy

Putin says Nord Stream 2 gas link to be finished as U.S. seeks good European ties

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Russian President Vladimir Putin attends a session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 4, 2021. Dmitri Lovetsky/Pool via REUTERS

  • First Nord Stream 2 line completed, Putin says
  • Gazprom shares rally, hit highest since mid-2008
  • Putin says Russian gas to Europe to grow by 50 bcm in 10 years

ST PETERSBURG, Russia, June 4 (Reuters) - Russia's Nord Stream 2 gas pipeline is ready to start pumping gas to Germany and the final stretch will be completed as the new U.S. administration seeks good relations with "key partners in Europe," President Vladimir Putin said on Friday.

Successive U.S. administrations have imposed sanctions to try to block the project that will ship gas directly from Russia to Germany, bypassing Western ally Ukraine.

Russia's Gazprom (GAZP.MM) has pressed ahead with building the pipeline after U.S. sanctions left it without a Western pipe-laying company in late 2019, but the administration of U.S. President Joe Biden last month waived some sanctions.

"I think it should be completed especially given that the new U.S. administration speaks of its intention to build up good relations with its key partners in Europe," Putin told a forum in St Petersburg. "How can you build good relations with your partners and neglect their interests? This is a nonsense."

Russia has finished laying pipes for the Nord Stream 2 first line and is set to finish the second one within two months, Putin said. Less than 100 kilometres (62 miles) are left to complete the project, Deputy Prime Minister Alexander Novak said.

Once Nord Stream 2 is finished, it will double the existing route's annual volume to 110 billion cubic metres and increase European energy dependency on Russia.

It also competes with shipments of U.S. liquefied natural gas and Biden has described the project as a "bad deal" for Europe.

But he explained the waiving of some sanctions last month by saying the project was nearly complete, and that continuing sanctions could have harmed ties with Europe. read more

Germany has advocated the project, while Ukraine is a strong opponent and sees it as a means for Moscow to exert political pressure and depriving Kyiv of transit fees.

Gazprom will start filling the first line with gas as soon as Germany grants its approval, Putin said. Gazprom shares rallied after the announcement, adding 0.75% and reaching 274 roubles ($3.76) per share, their highest since mid-2008.

As governments and investors ratchet up the pressure to decarbonise the fuel mix, fossil fuel energy is losing market share to renewable power, but Putin was bullish about demand and said that the Nord Stream 2 was a clean project as it did not involve fracking.

Russian gas supplies to Europe are seen exceeding 200 bcm this year and may rise by as much as 50 bcm in the next decade, Putin said. Ukraine must show good will if it wants Russian gas transit to Europe and the related fees to remain, he said.

($1 = 72.8970 roubles)

Reporting by Vladimir Soldatkin and Katya Golubkova; Editing by Jon Boyle

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