The Swiss-based company owned by Russian energy giant, Gazprom tasked with operating the controversial Nord Stream 2 pipeline has, reportedly, filed for bankruptcy and laid off all 106 of its employees, according to a local official.
Speaking to public broadcaster SRF, Silvia Thalmann-Gut, economics director in the Swiss canton of Zug (where the company operates) said, “Nord Stream became insolvent because of last week’s US sanctions.”
What is Nord Stream 2?
Nord Stream 2 is a 1,200 km pipeline under the Baltic Sea, capable of carrying gas from the Russian coast near St Petersburg to Lubmin in Germany. It was completed at a cost of 10 billion euros last September with Gazprom stumping up half the cost and other western energy companies like Shell and ENGIE making up the rest.
According to a BBC report, Nord Stream 2, if operated in tandem with Nord Stream alongside which it runs, is capable of delivering 110 billion cubic metres of gas to Europe annually. That, it bears mentioning, is more than a quarter of all gas that the European Union consumes every year. Although it was completed last year, Nord Stream 2 has yet to gain an operating license.
Why is it controversial?
The Nord Stream 2 pipeline has come to be viewed as an important tool for Russia to consolidate its energy dominance in Europe. Germany, for instance, which would have been one of the largest beneficiaries of Nord Stream 2, already imports some 35 per cent of its gas from Russia. Prior to the Ukraine crisis, former German Chancellor Angela Merkel had pushed hard to operationalise Nord Stream 2, in a bid to increase energy supplies to German homes.
But the pipeline has been strongly opposed by the US and UK who have, repeatedly, raised concerns that it would increase Russia’s energy stranglehold over the European energy market. Poland and Ukraine have also voiced opposition to Nord Stream 2 since, unlike the land-based pipelines that Russia currently uses to send gas to Europe, Nord Stream 2 bypasses Polish and Ukrainian territories, meaning Moscow would no longer need to pay millions to Poland or Ukraine in the form of transit fees.
What the bankruptcy means
Simply put, it means that international economic sanctions on Russia are working. Last week, in response to Russian President Vladimir Putin’s decision to embark on a military operation in Ukraine, German Chancellor Olaf Scholz announced that Germany would suspend the certification of Nord Stream 2.
The US also responded to the Russian invasion of Ukraine by rescinding years-old sanction waivers on Nord Stream 2 AG (the Gazprom subsidiary that operates the pipeline) and its corporate offices in what was seen as the final nail in the coffin for the pipeline, and, consequently, Russian ambitions to increase its energy dominance in Europe.
In an emailed statement to Reuters Nord Stream 2 AG said, “Following the recent geopolitical development leading to the imposition of US sanctions on Nord Stream 2 AG, the company had to terminate contracts with employees. We very much regret this development.”