🎧 Nord Stream 2: the plot thickens!

The day after the European Commission proposed an outright ban on Russian gas in the EU, a Swiss court threw a lifeline to Nord Stream 2.

The ruling opens the door to a potential revival of the defunct Russia-Germany gas pipeline that was half destroyed in a dramatic subsea explosion in 2022.

How should we square the circle of an EU ban on Russian gas with a possible revival of Nord Stream 2? How does the restructuring ruling affect the ownership of this contentious piece of infrastructure? Would any buyer really be interested in owning it?

This episode of Energy Flux: On Air unpacks the legal ruling and weighs up the options in light of the EU’s push to outlaw Russian gas entirely, which I covered in last week’s EU LNG Chart Deck.

I also discuss the historical purpose of Nord Stream 2, the role it played before and during the 2021-22 energy crisis, and how Gazprom’s actions have galvanised a European political consensus against a resumption of Russian gas dependency.

The full transcript is included below.

Thanks for listening,

— Seb

More from Energy Flux:

Episode transcript:

(00:00:19):

Hi there, and welcome back to Energy Flux On Air.

(00:00:23):

I'm your host,

(00:00:24):

Seb Kennedy,

(00:00:25):

founding editor of Energy Flux,

(00:00:27):

the energy newsletter analyzing European natural gas and global energy markets

(00:00:33):

through the lens of Europe's energy transition and global geopolitics.

(00:00:37):

I'm doing something a bit different on this episode.

(00:00:41):

I'm going to dedicate almost the entire show to a single listener question.

(00:00:46):

It's such an interesting topic and doing it justice requires quite a lot of explaining,

(00:00:52):

especially in the current regulatory environment.

(00:00:56):

So without further ado, the question comes from Mark in Hertfordshire.

(00:01:00):

He says, Hi Seb, love the show.

(00:01:02):

Can you give us your take on the Nord Stream 2 insolvency proceedings?

(00:01:07):

How should we square the circle of the stay of execution granted by the Swiss

(00:01:12):

Bankruptcy Court with the EU's proposed Russian gas ban?

(00:01:17):

Well, thanks for the question, Mark.

(00:01:19):

Nord Stream 2's insolvency saga is like the latest chapter in an endless legal

(00:01:26):

thriller full of action and suspense with geopolitical twists.

(00:01:31):

The Russian gas ban proposed by the EU that you referred to adds a fresh layer of

(00:01:36):

complexity and uncertainty into an already fraught outlook for this piece of

(00:01:41):

critical infrastructure.

(00:01:43):

So I'm going to unpack the key elements of the legal situation before then going on

(00:01:48):

to look at the Russian gas ban itself and how the two fit together to understand

(00:01:53):

where the pipeline might be headed and what it all means for European energy markets.

(00:01:59):

But first, just some brief background facts on Nord Stream 2 for unfamiliar listeners.

(00:02:07):

So,

(00:02:07):

Nord Stream 2 is a twin undersea pipeline built to carry up to 55 billion cubic

(00:02:14):

metres of Russian gas per year directly from Russia to Germany under the Baltic Sea.

(00:02:20):

And it ran alongside an operational project called Nord Stream or Nord Stream 1.

(00:02:26):

It cost about 11 billion euros to build and was and is fully owned by Gazprom,

(00:02:33):

but financed by five Western lenders,

(00:02:37):

energy companies Uniper,

(00:02:38):

Wintershell,

(00:02:39):

Deo,

(00:02:39):

Shell...

(00:02:40):

OMV and ONGIE.

(00:02:42):

They financed about half of the construction costs through loans rather than equity,

(00:02:46):

and they ponied up about 700 billion euros each.

(00:02:50):

But Gazprom owns 100% of the share capital of Nord Stream 2 AG,

(00:02:56):

which is the Swiss incorporated holding company for the Nord Stream 2 project.

(00:03:02):

Nord Stream 2 has been a real political flashpoint.

(00:03:05):

Construction was completed in 2021, but it was never commissioned.

(00:03:10):

Germany halted its launch in February 2022 amid Russia's full land invasion of

(00:03:15):

Ukraine and Western sanctions.

Episode Transcript

(00:19):
Hi there, and welcome back to Energy Flux on Air.
I'm your host Seb Kennedy, founding Editor of Energy Flux,
the energy newsletter analysing European natural gas and global
energy markets through the lens of Europe's energy transition
and global geopolitics. I'm doing something a bit
different on this episode. I'm going to dedicate almost the

(00:42):
entire show to a single listenerquestion.
It's such an interesting topic and doing it justice requires
quite a lot of explaining, especially in the current
regulatory environment. So without further ado, the
question comes from Mark in Hartfordshire, He says.
Hi Seb, love the show. Can you give us your take on the

(01:03):
Nord Stream 2 insolvency proceedings?
How should we square the circle of the stay of execution granted
by the Swiss bankruptcy court with the EU's proposed Russian
gas ban? Well, thanks for the question,
Mark. Nord Stream 2's insolvency saga
is like the latest chapter in a endless legal thriller, full of

(01:27):
action and suspense with geopolitical twists.
The Russian gas ban proposed by the EU that you referred to as a
fresh layer of complexity and uncertainty into an already
fraught outlook for this piece of critical infrastructure.
So I'm going to unpack the key elements of the legal situation
before then going on to look at the the Russian gas ban itself

(01:50):
and how the two fit together to understand where the pipeline
might be headed and what it all means for European energy
markets. But first, just some brief
background facts on Nord Stream 2 for unfamiliar listeners.
So North Stream 2 is a twin undersea pipeline built to carry

(02:11):
up to 55 billion cubic metres ofRussian gas per year directly
from Russia to Germany under theBaltic Sea, and it ran alongside
an operational project called Nordstream or Nordstream One.
It cost about €11 billion to to build and was and is fully owned

(02:32):
by Gazprom but financed by 5 Western lenders, energy
companies, Uniper, Winter, Shell, Dow, Shell, OMV and OMG.
They financed about half of the construction costs through loans
rather than equity, and they ponied up about €700 billion
each. But Gazprom owns 100% of the
share capital of Nordstream 2AG,which is the Swiss incorporated

(02:58):
holding company for the Nordstream 2 project.
Nordstrom has been a real political flashpoint.
Construction was completed in 2021, but it was never
commissioned. Germany halted its launch in
February 2022 amid Russia's fullland invasion of Ukraine and
Western sanctions. One of its twin pipes was

(03:19):
sabotaged in 2022, of course, alongside the two operational
strings of North Stream One in that dramatic subsea detonation.
It was worthy of a James Bond spy movie, and the insolvency
proceedings are. They relate to effectively the
the undamaged single string of Nord Stream 2 because without

(03:41):
operations and shrouded in sanctions, then then the the
holding company Nordstrom 2AG was to all intents and purposes
bankrupt, but not officially so.So a court in the Swiss Canton
of Zoog in Switzerland opens therestructuring rather than

(04:01):
liquidation proceedings in early2023 and but granted successive
moratoriums until the 9th of Maylast week when it approved a
debt restructuring plan. And that's a little bit like
Chapter 11, the US bankruptcy protection process.
This is a key asset that's been a focal point, a flashpoint for

(04:24):
political arguments across the EU and the rest of Europe for
many years. And the reigning line single
line that can carry up to about 27 billion cubic meters of gas
per year is essentially the principal assets as being, you
know, the subject of potentiallybeing auctioned or refinanced or
restructured or sold under the supervision of that Swiss court.

(04:49):
So the court itself approved this debt restructuring deal and
that essentially spared Nordstrom to AG, the Gazprom
owned holding company, from official bankruptcy.
Small creditors were paid off infull and the claims of those
major European lenders like Shell and Winter Shell, there
they were effectively elevated above the claims of Gazprom.

(05:13):
And this is a really interestingpoint because apparently the
shareholder voting rights that Gazprom held in Nordstrom to AG,
they have to all intents and purposes being suspended, which
means that if the the pipeline is sold, then Gazprom as an
equity holder and a debtor to those European lenders will only

(05:36):
get anything after all the creditor claims are paid off.
And that's really important because, you know, if it cost
them $11 billion to build where,and that was for two strings,
then you know what, how much canyou realistically expect to get
for one string in the context that I'm about to describe,
where Russian gas is, you know, facing immense hurdles and is

(05:59):
not entirely likely to return tothe European markets potentially
ever or at least for many years.So these Western creditors have,
you know, about €700 million each claim over Nord Stream, 2AG
and the infrastructure that it owns.
And they're very much now in thedriving seats.
So this restructuring procedure has really kind of turned the

(06:24):
tables over the power and control over, over the fate of,
of, of Nord Stream 2. Because before Gazprom really
called the shots as the sole shareholder.
But now it seems that the Western creditors have a bit
more of the upper hand. That said, they do have an
aligned interest. I think that both sides would
like to kind of get get something back from this

(06:46):
immensely expensive white elephant that's been half blown
up on the bed of the Baltic Sea.But quite how they go about
doing that could soon see their interests diverge.
And that's when the power play could come into effect because
we've seen interest from a US investor, this kind of
mysterious chap called Stephen Lynch, Who cropped up last year.

(07:07):
So he wants to buy the pipeline for quote, UN quote, pennies on
the dollar, which would flip control over this critical asset
to Western hands, allow Washington to essentially hold
stranglehold over Russian gas flows into Europe, which is kind
of an interesting geopolitical twist on the future energy and

(07:29):
security arrangements for Europe.
But I think it's a bit fanciful really, because, you know, like
Nord Stream 2, it never receivedGerman certification, so it
wasn't allowed to start up. And the E US gas directive,
which is an important regulationthat adds a hurdle to operating
Nord Stream 2. And so like pipelines that enter

(07:52):
the the the EU single energy market, they must separate the
legal ownership of the pipeline from the physical gas supply of
the gas that the pipeline is carrying.
So you can't own the pipeline and the gas supply entirely.
And that's actually why the Western energy companies opted
for a financing role rather thantaking shareholder stakes.

(08:14):
They all wanted good rights on Nord Stream 2 and to own the
molecules flowing through the pipe.
And they couldn't have that if they owned stakes in the Nord
Stream 2AG operating company as well.
So that's why we're in this situation now.
So what's going to happen? Well, it's worth recalling at

(08:35):
this stage that Gazprom has a lot of legal baggage.
There's about €13 billion in unsettled arbitration claims
from Uniper, which is one of thecreditors to Nord Stream 2AG for
non delivery of gas under their previous long term contract.
So you can imagine like a third party buyer wants to come in,

(08:57):
take control of this potentiallyoperational single string of
Nord Stream 2, but then all the gas revenues could be seized
because, you know, Gazprom owes a lot of money to Uniper and
hasn't paid up for for cutting off gas in the 2021-2022 crisis
invasion period. So that's that's probably going

(09:18):
to be a bit of a minefield really for any new owner of the
infrastructure. And then back to Mark's
question, you know, what about this new element, the E US
Russian gas ban? How do you square the circle of
the, you know, the, the kind of lifeline to Nord Stream 2's
potential resuscitation with thefact that Brussels is floating a
quite serious sounding plan to actually outlaw the supply or

(09:43):
delivery or trade of Russian gaswithin the EU?
And that could start as soon as the end of this year.
So they they published a road map last week, almost around
about the same time as the insolvency ruling, which was
kind of an interesting timing for that.
Then this road map says there'llbe no spot sales and no new
contracts after 2025 for Russiangas.

(10:05):
And it's pretty sweeping the wayit's been been proposed.
It's quite bold. And you seem to catch a few
commentators by surprise for itsboldness, because it would, if
passed, rule out any flow of Russian origin gas along Nord
Stream 2 or any other pipeline, regardless who of who owns the

(10:26):
pipeline. And obviously you can't change
where Nord Stream two starts or ends.
You know, it is a fixed piece ofinfrastructure.
So it's very difficult to put anything down that pipe into
Europe that's that's not Russiangas.
So if this if gas ban comes intoeffect, then it's very difficult
to see how Nordstrom 2 has any value whatsoever.

(10:48):
But, and there's always a butt of with these things, of course,
isn't there? The Russian gas ban, well, it
hasn't been implemented yet. And when you start to look at
it, you start to think, well, actually there could be a lot of
compromises. I mean, I think the European
Commission's proposing it because they want to get ahead
of, you know, any possible settlement over Ukraine, which

(11:08):
I'll get on to as well a bit later on.
They want to kind of close the door on Russian gas coming back
as part of a peace settlement. But we've already seen how
Russian energy products, Russiancommodities have managed to kind
of skirt around Western sanctions.
It's like, you know, Russian gascould conceivably be rebranded

(11:29):
by doing gas swaps, you know, like pumping the gas into
Azerbaijan and Azerbaijan, that freeing up gas that Azerbaijan
produces for its domestic marketto then export through, you
know, the Southern Gas Corridor.Or the same with Turkey as well,
because Turkey is a massive kindof transit route for, for
Russian gas because they have the Turk Stream pipeline that
runs under the Black Sea. And that's now the main entry

(11:51):
point for, for Russian gas indirectly into the EU through
Turkey. So they could just send more
Russian gas through, through Turkey and, you know,
essentially kind of whitewash itof its origins.
And then Turkey's even saying they signed an agreement with
with Romania after the Russian gas ban was proposed.
They signed this kind of high level political agreement.

(12:11):
The leaders of Romania and Turkey saying that Romania is
going to start buying Turkish gas now, which seems like quite
an affront to the European Commission because it's really
blatantly not going to be Turkish gas.
I think Turkish gas, if I recallright, only supplies about 5% of
Turkish domestic gas needs. So it's kind of like, well,
guys, where are you? Where are you going to get the

(12:33):
gas from? Then you've got this kind of
massive Russian gas pipeline coming across the Black Sea, and
Turkey's going to provide entirely Turkish gas to Romania,
right? Yeah, sure.
OK. All right.
Anyway, so you know, like there is this this possibility that,
you know, Russian gas will be rebranded in some form or
another and still find its way into the European market.

(12:55):
The big question is really like,you know, the, the ban, if it's
introduced, then like how fiercely will it be policed?
Does it rest on member states willingness to enforce it?
Because, you know, judging by Romania's attitude, then it
sounds like they'd be quite happy to kind of go along with a
charade that Turkish gas is Turkish and it's not actually
Russian gas. And I'm sure there'd be lots of

(13:16):
other member states who are quite willing to flout the ban.
I mean, Hungary, Slovakia, they're all very kind of Russia
friendly, aren't they? And they quite happily get their
hands on, you know, non Russian,Russian gas if they could.
So, you know, it's like how how can the EU trace and crack down
on Russian gas swaps with these countries?
It's, you know, it's hard to seeit not being laundered to avoid

(13:39):
being penalized by by these new rules.
And there are other questions aswell.
So if it's like a selective ban against a single country's
exports, does that expose the EUto a Russian challenge before
the World Trade Organization because that kind of could flout
ETO rules to enabling free and fair trade.
That's an unanswered legal question.

(14:02):
And, and I think there's like the biggest question of all
really is, and I think this is kind of what the ban is intended
to address, is, you know, what happens if there's a peace deal
in Ukraine, which puts Russian gas exports at the heart of any
agreement between the sides. You know, if there's if there's
a kind of negotiated settlement and the big prize for Moscow is

(14:27):
that it gets some of its European market back for, for
gas and maybe other energy products as well, then it's hard
to see how this Russian gas ban can really be enforced or quite
how that would play out in the negotiating table.
And the other aspect of this as well, of course, is that Ukraine
itself is in a really, really difficult energy situation,

(14:51):
war-torn country struggling to replenish its severely depleted
gas storages. They went as low as about 3%, I
think over the winter and they haven't been replenished much
yet so far at this early stage of the refilling season.
And my understanding is that pipeline and access into Ukraine
is actually quite constrained byvery high border tariffs from

(15:12):
Southeast Europe and limited interconnector capacity
availability from Poland. So, you know, an EU ban on
Russian pipeline gas, if effective, could actually force
Ukraine to turn to Russian gas to help meet its domestic needs
and refill those gas storage facilities.
And that would really weaken Kiev's negotiating hand at a

(15:33):
critical moment in the conflict.So it's there a lot of really,
really kind of knotty difficult trade-offs at the heart of this
Russian gas ban that make you wonder if it could really be
introduced and enforced as the Commission is proposing.
So just to summarize, I'd say, well, any EU ban on Russian gas
could be very leaky. But I would say that the

(15:54):
ultimate fate of Nord Stream 2 is probably bound up in the
Ukraine peace talks, which meansit's not really in Europe's
hands because Europe isn't really in the driving seat when
it comes to Ukraine. Obviously, they are a material
actor, but the big players are the US, Russia and Ukraine, of
course, because Ukraine can continue fighting as long as it

(16:18):
has access to weaponry, althoughthat could be curtailed.
Again, if, you know, the US and Russia agree some sort of deal.
And they could turn the pressureon to the Ukrainians to force
them to stop fighting by cuttingoff access to military
intelligence and to US weapons. Well, you know, that could again
turn the tables on the battlefield, couldn't it?

(16:39):
But, you know, the war is dragging on.
There are putative talk going onbetween Moscow and Washington,
but apparently getting nowhere as far as I can tell from the
outside, apparently due priorityto the Kremlin's intransigence
on a bunch totally unrealistic red lines that I won't get into
here. But essentially they want
Ukraine on a platter. And I think that even the kind

(17:01):
of Kremlin friendly administration in the White
House is kind of struggling to sell that to to anybody but the
most ardent kind of Russia fileswho seem to be running amok at
the moment in the halls of powerin Washington.
So where's it all going to go? I mean, peace, you have to think
peace in Ukraine. It will have to prevail in some
form or another. It might be a kind of ugly,

(17:23):
unstable, unsustainable, unenforceable and highly
damaging peace deal that really undermines European security
interests for decades to come. But a deal of some description
perhaps, that kind of a deal would almost certainly have to
be done at some point because everybody loses in a stalemate,
which is essentially what we're in now.
I don't think either side wants to get bogged down in a forever

(17:46):
war. But I mean, I guess at the same
time, the way things are going, you can't rule that out either.
Where does that leave us? And I think it's worth
mentioning just to take a step back here and to think about
Nord Stream 2 and why it was built in the 1st place.
I mean, Nord Stream 2 was proposed and built by Russia
alongside Nord Stream one as a means of like for the Russian

(18:08):
side, cutting Ukraine out of theequation.
Because Ukraine of course earnedmany billions of euros in
transit fees prior to 2022. And just by having this very
elaborate and high capacity transmission system that
connected Russian Siberian gas producing fields with these kind

(18:30):
of prized premium European markets, then they were the
middle man. And they took a cut essentially
for, you know, like a kind of rentier economy arrangement
where it was just just of my money flooding into Ukraine.
And I've been told, and I've never been to Ukraine, never
been to Kiev, but I've been toldthat these immense checks just
dropping into Kiev, they fostered a real kind of

(18:52):
sprawling parasitic kleptocracy that was just completely riddled
with corruption. I've heard it described as a
kind of mafia organization that just sprung up to gorge on these
Russian gas transit fees over the years.
And that was one thing that EU leaders pretty much turned a
blind eye to, along with so muchelse in the years leading up to

(19:13):
Russia's annexation of Crimea inin 2014.
And I think that the Russian side got sick of kind of
bankrolling these mafia types inKiev and wanted to cut them out
of the equation. They wanted to just bypass
Ukraine and probably strategically so that they could
then think about, you know, thenexerting their will over
Ukrainian sovereignty and eventually planning an invasion

(19:36):
of various bits, the annexation of Crimea and then the full land
invasion. They just wanted to kind of take
Ukraine back. One way of doing that, or one of
the many steps leading up to being able to do that was to
kind of end their access to to Russian gas transits, which of
course did eventually finally come to an end on the 1st of
January this year. Russian transits of gas through

(19:58):
Ukraine have halted. And so, you know, that is
another loss of revenue for for Ukraine in this war, which was
kind of crazy to think that theywere still earning Russian
transit revenues for a couple ofyears after the invasion in
February 2022 for transiting Russian gas to European buyers,
just like they always have done.There's another side note that's

(20:21):
relevant in this story. Everyone says that Russian gas
is cheap and but that's that's amyth.
Remember that liquefied natural gas.
So LNG from global suppliers wasintroduced into Europe as a
means of holding Gazprom's feet to the fire in contractual
negotiations. Because in its heyday, Gazprom

(20:42):
sold gas to lots of EU utilitiesindustrials under these kind of
premium priced oil indexed long term contracts that were often
priced above the prevailing market rate on the Dutch title
transfer facility, which is the the benchmark spot trading venue
in the Netherlands for for natural gas and the reference

(21:03):
price for Europe. So when the spot market evolved,
the introduction of competition and liberalisation, it did what
it was supposed to do, which wasto kind of, you know, more
competition increases market efficiency.
And that kind of classic kind ofmarket economics.
One O 1 playbook, which is the, you know, diversity of sources
and breaking down these rigid state structures and breaking

(21:27):
open this closed House of bilateral trade between state
backed actors. And having lots of dynamic
private capital flow in. And then having lots of
interesting innovation in financial instruments and
Futures Trading and all the stuff that I monitor and energy
flux like that, that did lower prices.
So for a very long time, the spot price of gas was on the CTF

(21:47):
was much lower than the the price that European buyers have
to pay gas from under those oil index contracts.
And of course, Vladimir Putin did like troll the EU for
pursuing this strategy of liberalizing European gas
markets, said like, you know, becareful what you wish for.
And it was, it was somewhat prophetic because obviously when

(22:09):
the the market conditions changed, they changed
dramatically. So Gazprom went from being one
of the most expensive suppliers to being one of the cheapest
when the spot market went absolutely crazy during the
2021-2022 energy crisis, which of course Gazprom helps to
engineer. It's worth adding by withholding

(22:29):
volumes from the the European gas market, which it was used to
sending and allowing its own gasstorage facilities which it
owned and controlled in Germany,allowing those to deplete.
So leaving our Europe's biggest economy in a really kind of
parlous energy situation during the refilling season of 2021.
That was all part of this premeditated campaign to

(22:52):
destabilize the European energy market and to weaponize its use
of gas, all obviously as a prelude to the full land
invasion of Ukraine. So that's a little bit about the
background of Russian gas. And it's not really like the
cheap thing it's always described as being and like the
the reintroduction of Russian gas.
Oh, we need our cheap Russian gas.
Oh, our poor industrials, They're all, they're all going

(23:15):
bankrupt. They're all sufferings.
We don't have Russian gas anymore.
And it's like, well, actually, it's not quite how things were.
And I think the EU policy of like diversifying gas sources or
just diversifying energy sourcesin general, but even within gas,
like having pipelines from Algeria, global LNG supplies,
having lots of LNG terminal regassification capacity and

(23:39):
then having lots of trading within the EU of different gas
sources. I think all of that stuff, it's
all vitally important, isn't it,to building resilience into the
system. This kind of single point
supplier reliance is it's just arecipe for vulnerability which
can then be exploited for geopolitical advantage.
And that's another big question that sort of hangs over the

(24:01):
Russian gas ban because, you know, there's, I think, I think
there's about 20-30 billion cubic metres per year of gas
still entering the EU from Russia indirectly through that
Turk stream pipeline I mentioned.
And like, you know, like, how's that going to be replaced?
Is it just going to be mopped upby the other kind of dependency

(24:22):
which EU has, which is on USLNG,so American liquefied natural
gas or Qatari liquefied natural gas, Is it just going to swap 1
dependency for another or exacerbate the dependency on
those two big suppliers? It's difficult to know, isn't
it? But it's hard to see there being
really that many options like who else can really ramp up
supply to meet that demand if ofcourse that demand remains.

(24:45):
And that's another important kind of part of the story, which
I won't get into too much. But you know, European gas
demand is on secular decline slope.
So it's hard to see that the kind of demand profile being
particularly resilient for all the topics I mentioned on
previous episodes. So the outlook is is a bit shaky
on that front. But yeah, essentially.
So the kind of the whole gas story and, and, and the Nord

(25:08):
Stream two-story is also bound up in European geopolitics and
relationships between the EU andRussia.
Bearing in mind everything that's happened in recent years,
it's, it's quite understandable for there to be a very strong
political consensus across European capitals against

(25:29):
resuscitating that dependency onRussian gas in particular.
I mean, you know, when, when thethe gas prices spiked to what
was it about €300 per MW hour in2022 after the invasion, then
anybody who was holding oil index contracts with Gazprom and

(25:50):
was able to make just these obscene profits by reselling
those same molecules that were priced on Brent slope into this
red hotspot market. The margins were just
phenomenally. It was like winning the lottery
a million times over every single day.
And that dual pricing structure was really revealed for what it
was. You know, it was allowed both
European gas buyers and gas fromitself to so to manipulate the

(26:13):
market and rake in huge war profits during the early months
of the war, before, of course, Gazprom cut off flows as part of
the Kremlin's multidimensional war campaign against the West
and the European then in particular.
So the scars of 2021-2022, they're still very raw.
And I don't think anybody's forgotten the pain that was

(26:34):
heaped upon consumers ultimatelyby Russia's weaponization of gas
and all the political fallout from that.
Because obviously you know, thatthat kind of upsurge in in
energy costs that were all rooted from the gas price crisis
of 2021-2022. That's all fermented, all this
discontent among socially deprived communities across

(26:56):
Europe where you know, you've then seen, you know, these kind
of de industrialized, forgotten communities just turning into
the breeding ground for the kindof populist far right.
And this really quite kind of worrying trends towards
authoritarianism and and this neo populism.
That's, that's, that's creeping at the edges of European

(27:18):
democracy and threatening to undermine it at any given
moment. And I think that the energy
story is is a key element to to that trend.
And there is one final element I'd like to discuss around the
whole kind of energy gas weaponization theme.
And then it's something that energy Flux covered in a recent

(27:38):
deep dive article. And that's how Russian forces
are now systematically using thegas weapon in a different way.
And that's to destroy Ukraine's ability to produce it's own
domestic gas resources and weaken Kiev's hand at this
critical moment in the conflict.I won't go into that in too much
depth, but I just raised that point to kind of under score why

(28:01):
there's so much resistance to this idea of allowing Russian
gas back in again and why the ban has been introduced now in
the way it has been or is being introduced and proposed.
But the Ukraine gas production story, that really is a very
separate story to Nordstream andit's worth reading as well.
So you can read that story in full on the Energy Flux

(28:22):
websites. Just go to WWWW dot energyflux
dot news and don't forget to sign up for a subscription while
you're at it. In conclusion, I'd say that N
stream twos fates or it's likelyfate is probably just a sort of
quite sorry end really as a as akind of stranded asset.

(28:42):
I mean, I think barring just a phenomenal geopolitical U-turn,
then door stream twos intact pipeline will probably just
gather rust at the bottom of theBaltic Sea.
EU ban, German opposition sanctions, they all leave very
little room for revival. And there has been some chatter
around repurposing it for hydrogen, making it part of

(29:05):
Europe's hydrogen backbone, which I definitely won't get
into now, but it's technically possible.
But I wateringly expensive and the market really just isn't
there, isn't ready for that kindof investment now.
So the pipeline's really it's an11 billion euro relic symbol of
Europe's sort of energy divorce from Russia.
If you like say the legal and political barriers are thicker

(29:26):
than Baltic ice and the less thepeace talks rewrite the rules,
then this pipeline's future is part of the pun deep underwater.
So Mark, thank you. What a great question and really
enjoyed getting into the weeds of that one.
And remember, if you want to have your own energy question
answers in depth on the Energy Flux on Air podcast, then go

(29:50):
take out a subscription. Head on over to
www.energyflux.news. You can sign up for free emails
just to kind of get a feel for what it's like.
But if you want to get all of the exciting analysis, all the
deep dives, all the charts, the UNG chart deck, you want to be
able to comment on all the posts, join the community, raise
questions for the pod, then takeout a paid subscription.

(30:13):
All the details are on the website and all I can say is go
check it out. Thank you for listening, it's
been a joy as ever and I'll see you again next time.