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Russia Increases Its Hold On European Energy Markets As Sweden Approves Nord Stream 2

By Vusala Abbasova June 11, 2018

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The Nord Stream-2 project is set to deliver 110 billion cubic meters (bcm) of Russian gas to Europe annually, via two parallel pipelines that will be laid next to the two line parallel pipelines currently in operation and known as Nord Stream.

Sweden’s government has decided to approve the construction of the Nord Stream 2 gas pipeline that will deliver Russian natural gas to European consumers via the Baltic Sea. Russia’s state energy company, Gazprom, has received all necessary permits for the construction of what has been a long disputed project.

“The government gives green light to Nord Stream's request to place pipelines in the Swedish economic zone in the Baltic Sea,” read a statement from Kerstin Lundgren from the Green Liberal party, in the Swedish newspaper Dagens Industri.

Sweden's Minister for Enterprise and Innovation Mikael Damberg also weighed in.

“The basis of international law is that it is permissible to pull pipelines outside the territory of other countries through their so-called economic zone,” he said.

“The government has now examined the application and noted that both national and international law does not give the government the scope to reject the application, just as Finland has recently made.”

The Nord Stream-2 project is set to deliver 110 billion cubic meters (bcm) of Russian gas to Europe annually, via two parallel pipelines that will be laid next to the two line parallel pipelines currently in operation and known as Nord Stream. The 1,200-kilometer-long Nord Stream 2, which is currently under construction, will link Russia and Germany along the bottom of the Baltic Sea, bypassing Ukraine and a source of opposition for the project. Ukraine has traditionally benefited from transit fees incurred from land-based pipelines that serve the same purpose.

“This is an important milestone for our project. We are pleased to have obtained the Swedish government’s approval to construct and operate Nord Stream 2,” said Senior Advisor for Nord Stream 2 Lars O Gronstedt.

Sweden has become the third country after Finland and Germany that gave Gazprom permission to construct and operate what will be a 510 km section of Nord Stream 2, within its Exclusive Economic Zone.

Although Damberg admitted that “the government’s judgement was that we were not able to say no” to Gazprom’s tempted offer to implement $11 billion project, Sweden remains critical of the gas network amid Europe’s growing reliance on Russian energy supplies.

“The fact that the issuance of permits for the construction of the pipeline continues - this is positive for Gazprom, as the chances for the project are growing,” said an analyst from the National Energy Security Fund, Igor Yushkov, according to TASS.

Gazprom is also holding negotiations with Denmark, which is currently undergoing a security probe over the route. The Russian government has repeatedly called for not politicizing the topic of the construction of the gas pipeline.

“It is a purely economic and, moreover, purely commercial project, because participants of this project calculate their profits, economic gains from its implementation and come to the conclusion that such implementation is expedient," Russia President Vladimir Putin said to highlight absolutely depoliticized nature of the project during talks with Austrian Chancellor Sebastian Kurz, earlier this year.

However, there are currently several states, who oppose against the Nord Stream 2 construction, including Ukraine, which is afraid of losing revenues from Russian gas transit; Latvia, Lithuania and Poland, which believe the project is a Russian political tool meant to keep the continent dependent on Moscow. The U.S. has opposed the project as American companies have ambitious plans to export liquified natural gas (LNG) to Europe.

Despite the objections from Kiev, which sees Gazprom as creating a monopoly on European energy sources, Gazprom is determined to continue cooperating with European capitals and leaders within, even as it plans for a third line, dubbed Nord Stream 3.