Key point: Nord Stream 2 and Turkstream do not pose any risk to Europe’s energy security. Quite the opposite, they improve it.
Europe has nothing to fear from Nord Stream 2. Quite the opposite: it will increase Europe’s security of supply without reducing the country’s energy solidarity with Central Europe or mortgaging our foreign policy vis-à-vis Ukraine. European governments should embrace it openly and push back against the misconceived and illegitimate U.S. sanctions.
On natural gas, Europe has prevailed over Russia, decisively. Through a process of EU-mandated regulatory reform, EU competition law enforcement—both strongly objected to by Russia—and EU-subsidised infrastructure development, once-national gas markets have been gradually integrated into a European one. Nearly all Russian gas consumed in Europe today competes directly with other sources of gas. Very large import capacity for LNG and non-Russian gas in Western Europe exerts competitive pressure on Russian gas everywhere, including deep into Central Europe.
When competitive gas trading took off in northwest Europe in the early 2010s, the traditional pricing of Gazprom’s contracts became outdated and unsustainable. The Russian company—and its owner-government—resisted but eventually gave in. It now sells most of its gas at European “hub” prices.
Structural market changes have had geopolitical implications. Russia used to administer rigid, bilateral contracts with large European importers which held considerable political influence in their home countries. In just a few years, Gazprom was turned, by the EU and without any negotiation with Russia, into a commodity supplier to a single, large, competitive Western European gas market. Pricing is beyond its control and so is the identity and location of the ultimate buyers of its gas. Imports of Russian gas are now politically benign.