Germany’s Federal Council of Economic Experts, in its baseline scenario, assumes a sharp decline in economic output of -2.8% this year but sees a possible increase in output by 3.7% over the course of 2021.
A ‘Recession’ scenario, meanwhile, assumes negative economic growth in 2021 and 2022 which will keep demand, prices and emission on very low levels which could lead to a sharp reduction in electricity as well as related coal and gas demand.
Nord Stream-2 to boost Russian gas supply
Supply of natural gas to Germany is abundant and keeps rising as Nord Stream-2, second leg of the Gazprom-led interconnector through the Baltic Sea, is now set to become a reality. Denmark on July 6, gave the Nord Stream 2 consortium permission to utilize Russian pipe-laying vessels with anchors in Danish waters.
Start-up of the second pipeline leg will increase the overall transport capacity to nearly 99 bcm per year which is bound to greatly reduce Germany’s need for additional LNG imports.
‘Akademik Czersky’ to build final stretch
Construction of the 1,230-kilometre pipeline is nearly complete, except for a final stretch of about 120-kilometers in Danish waters. The project was halted in December when the Swiss-Dutch pipe-laying company Allseas suspended works over threats of U.S. sanctions.
Denmark’s decision to allow Gazprom to build Nord Stream-2’s final stretch with Russian vessels means the controversial interconnector will become a reality. The pipe-laying vessel ‘Akademik Czersky’ is already in nearby waters in the Baltic Sea. The vessel is currently owned by the Samara Thermal Energy Property Fund (STIF), operated as part of the Gazprom Fleet.
Though Gazprom is included in some less U.S. stringent sanctions, analysts expects this will not hamper the Russian state gas exporter to forge ahead with a project as strategic as Nord Stream-2.
Apart from Gazprom, Nord Stream’s lead developer, the European utilities Uniper, Winterhall, Engie, OMW and Shell are also invested in the project.
Russia keeps playing ‘pipeline politics’
Once Nord Stream 2 is in place and fully operational – and provided gas transits via the Belarus/Poland route resume as agreed – Gazprom would no longer need to use the route through Ukraine which would jeopardize supply security in Ukraine itself and in several eastern European countries.
Alexey Miller, CEO of Gazprom, and the Government of Belarus in mid-February agreed on the pricing of Russian gas deliveries until the start of 2021. The transit volume of Russian gas is understood to remain at the same level, ensuring stable onward deliveries to Germany via the Belarus-Poland pipeline.
Now, Gazprom said is striving to complete construction of the Nord Stream 2 as well as the second leg of TurkStream pipeline through the Black Sea to Bulgaria, Serbia and onwards to Austria before the end of 2020.
Over the past few months, Gazprom has already substantially reduced the volumes of gas it transits across Ukraine, and by ramping up volumes through Nord Stream and Turkish Stream instead. The Ukrainian state is at risk of losing roughly $3 billion gas-transit fees – about 3 percent of national GDP.