The U.S. and Europe energy game focuses on Beixi No. 2

In the past few days, US representatives have held video conferences with 12 European contractors for the project. According to a source, “the threat from Washington is very, very serious.”

U.S. officials put pressure on video conference

According to the German “Le Monde” citing multiple sources, the United States is increasing pressure on German and other European companies involved in the construction of the “Beixi-2” project. U.S. officials “have been very clear in the video conference. Indicates that it wants to prevent the completion of the’North Stream-2 project.” A source said, “I think the threat from Washington is very, very serious.”

The “Beixi-2” project includes the construction of two natural gas pipelines from the Russian coast to Germany through the Baltic Sea, which are transferred to Europe via Germany, bypassing the traditional Russian-European natural gas pipelines through Poland and Ukraine. The total length of the project is about 1,200 kilometers, the total gas transmission capacity is 55 billion cubic meters per year, and the total project cost is 9.5 billion euros. Gazprom (Gazprom) contributes 50%, France ENGIE Group, Austrian Oil and Gas Group, and Royal Dutch Shell , Unippel of Germany and Winterschall of Germany each provided 950 million euros in financing.

Countries such as the United States, Ukraine, and Poland oppose this project. The United States has announced sanctions on the project from December 2019 on the grounds of the need to diversify its energy supply, requiring companies involved in pipeline laying to immediately stop construction. At present, the construction of the project has completed 94% and entered Danish waters. The laying of the last part of the gas pipeline led by Gazprom has not yet been completed. The US sanctions led to the withdrawal of the Swiss company responsible for the project’s offshore pipeline laying. Gazprom plans to complete it by the end of this year or early next year.

The US-Russia Controversy in the Natural Gas Market

The German weekly “Focus” stated that the US sanctions caused dissatisfaction among EU countries. Oliver Hermes, chairman of the German Economic East Council, said that the threat from the United States poses a risk to an investment of 12 billion euros and the sanctions may affect 120 companies from 12 European countries. All European natural gas consumers may face additional costs of up to 4 billion euros each year, because the unprecedented US intervention in European energy sovereignty will lead to a reduction in supply and thus an increase in prices.

Data show that Europe is the main export market for Russian natural gas. Natural gas from Russia accounts for more than 40% of the natural gas imported by the EU. “Europe’s share of U.S. liquefied natural gas exports will continue to decline.” A report recently released by the German Economic Research Institute DIW stated that Europe is expected to account for about 30% of U.S. liquefied natural gas (LNG) exports this year. By 2030, this proportion will be reduced to 20%, by 2040 it will be further reduced to 12%, and by 2050 there will be only 2%.

Lin Boqiang, dean of the China Energy Policy Research Institute of Xiamen University, told the Global Times reporter on the 28th that in the international market, the price of natural gas in the United States is more advantageous than that of Russian natural gas. However, due to transportation cost issues, Russian natural gas has more advantages in the European market. Competitiveness. Statistics show that the total US LNG export volume this year is 80 to 90 billion cubic meters, which will increase to 130 billion to 140 billion cubic meters by 2030. In the coming decades, demand in the Asia-Pacific region is expected to increase significantly.

Save the shale gas industry

Lin Boqiang analyzed that the United States is eager to interfere in the construction of the “Beixi-2” project, and it is also considering competing for the market for its own shale gas companies. “The mining technology and cost of the U.S. shale gas industry are not a problem. The key is that the market is sluggish and energy prices affect corporate production.” Data show that the U.S. natural gas futures price has been fluctuating at a low level since March this year, and it reached 1.414 at the end of June About US$/million British fever, setting a new low in 25 years.

The Russian TASS news agency previously quoted the analysis of Vladimir Batyuk, an expert at the Institute of American and Canadian Studies of the Russian Academy of Sciences, saying that the reason for the US sanctions on the “Beixi-2” project can be explained by its economic situation: the crisis caused by the new crown epidemic , The US energy industry is in a difficult situation, hoping to get rid of the crisis by exporting energy to Europe. Americans are dissatisfied with the Germans buying Russian natural gas instead of the more expensive shale gas in the United States. German media also quoted the analysis of experts as saying that, globally, European energy demand remains strong, but demand in other regions such as Northeast Asia has declined, making the United States hope to export more LNG to Europe. Compared with the serious environmental damage caused by LNG in the United States, the weather in Russia is cheaper and more environmentally friendly.

Currently, the US shale gas industry is experiencing a wave of bankruptcy. At the end of June, Chesapeake, one of the pioneers of the US shale gas industry and the largest shale gas producer in the US, declared bankruptcy. Data show that Chesapeake announced a net loss of US$8.3 billion in the first quarter of 2020 and a long-term debt of US$9.5 billion. The US shale oil and gas production giant Whiting Oil filed for bankruptcy protection in April. Data from the international credit rating agency Standard & Poor’s shows that 18 oil and gas companies in the United States have defaulted on debt so far this year, while only 20 were in debt last year.