Lavrov: U.S. Could Help Russia Reboot Nord Stream Pipelines
Russia's top diplomat said Wednesday that the U.S. could be willing to help Gazprom restart its giant subsea pipelines to Western Europe, which would slash energy costs in Europe and make U.S. LNG less competitive on the EU market. Gazprom's giant Nord Stream system has been shut down since 2022, but if repaired and restored to full service, it has the capacity to supply nearly a third of all EU demand.
"There is talk about Nord Stream. It will probably be interesting if the Americans use their influence on Europe and force it not to refuse Russian gas," said Russian Foreign Minister Sergei Lavrov.
Russian pipeline gas is by far the cheapest natural gas source for Northern Europe, and its return would be welcomed by some European industrialists. When Russia invaded Ukraine and the EU responded with sanctions, Gazprom effectively cut off subsea and terrestrial pipeline gas deliveries to Western Europe - ending long-term contractual relationships that had existed since the Soviet era and hiking EU gas prices overnight.
Politico reports that the concept under discussion would be to have an American operator buy the Nordstream system's pipeline infrastructure. To do this transaction legally would likely require lifting or waiving sanctions on Gazprom and Nord Stream 2. The American pipeline operator would then serve as a middleman, taking gas from Russia and selling it to European utilities.
One Nord Stream 2 pipeline is serviceable and could likely start if it gained European authorization, a politically difficult change. To reach full system capacity, the other three lines would have to be repaired to fix damage from a 2022 sabotage attack.
In his interview, Lavrov noted that U.S. businesses currently have an edge over Europe on energy costs because of low U.S. natural gas prices. He noted that most top EU leaders are firmly against resuming imports of cheap Russian gas; if Nord Stream were restarted with American involvement, it would lower the EU's energy costs and help European firms better compete with American industry.
Less profitability for U.S. LNG
When Gazprom cut off its supply to Western Europe in mid-2022, the EU replaced Russian volumes by buying more LNG from big suppliers, notably the United States. European sales have powered the U.S. LNG industry's growth: In 2022 and 2023, the U.S. was Europe's biggest LNG supplier, averaging about eight billion cubic feet per day. Europe bought more than half of all U.S. LNG exports last year, up from zero in 2015, according to data from the U.S. Census Bureau.
If cheap Russian pipeline gas returned to Europe at scale via the Nord Stream pipeline system, Russia would retake market share and regain its place as Europe's largest gas supplier, according to Dutch commercial bank ING. Inexpensive Russian supply would cut EU gas market prices in half: European wholesale gas would likely plummet from $14 per MMbtu to about $6 per MMbtu, the minimum cost of production at American LNG plans.