Pipeline on Pause: Nord Stream 2 in the Context of War

The suspension of the Nord Stream 2 pipeline’s operations on the eve of the Ukraine invasion may not have the intended impact.


On February 22, German Chancellor Olaf Scholz rescinded the previous government’s certification of the Nord Stream 2 natural gas pipeline in response to Russia’s recognition of two separatist regions in Ukraine as independent. The subsequent Russian invasion of Ukraine casts the pipeline’s future in even more doubt.


– The stepping back of key financers means the Nord Stream 2 pipeline will not likely become operational in the near- to medium-term, if ever
– The project’s cancellation, in itself, will likely not impact Europe’s energy security or the likelihood that Russia will disrupt supplies through Ukraine
– A permanent suspension of Russian gas supplies to Europe is unlikely in the present, but any change to this status would deal a major blow to European energy security and could necessitate major investment in infrastructure and diversification
– Other financial measures will likely have a larger long-term impact on Russia’s revenues and geopolitical calculus


If operational, the Nord Stream 2 pipeline between Russia and Germany would allow Moscow to deliver and sell 55 billion cubic meters of gas to Europe, bypassing transit routes through Ukraine and Belarus. Nord Stream 2 — a conduit running parallel to the Nord Stream 1 pipeline with the potential to double the route’s overall capacity — has been ready since September 2021, but was awaiting final regulator approval before going into operation. 

Germany had long been reluctant to accede to pleas from the United States to block the €11 billion project, as it viewed cheap gas from Russia — comprising some 35% of Germany’s total demand — as a key “bridge” for the country’s environmentally-focused transition away from nuclear and coal. One of the initial principal points of opposition to the project internationally was that the pipeline would circumvent Ukraine, which depends on natural gas transit fees for billions of dollars in revenue and is heavily reliant on imported gas for domestic use. Though the share of gas passing through Ukraine has halved in the last decade, as of 2021, a still-significant 25% of Russian gas transited the country.

The calculus changed for all parties when Russia recognized the independence of self-declared separatist republics in Ukraine’s Luhansk and Donetsk regions, a precursor to the large-scale incursion of Russian forces into Ukraine. Germany responded to the move by suspending Nord Stream 2’s certification.


As the Nord Stream 2 project was suspended rather than scrapped entirely, some observers argue that Germany will likely keep the possibility of restarting the process on the table to maintain leverage over Russia and, hopefully, influence its actions in Ukraine. However, concerns among the project’s European stakeholders in recent weeks have put the future of Nord Stream 2 in near existential doubt. Austrian energy company OMV had a crisis meeting on the issue. Shell went farther, announcing it would remove its investment in Nord Stream 2. Norway’s Wintershall Dea announced it would write off its 1.1 billion euro financing of the project. German utility Uniper was the last of the western backers of Nord Stream 2 to respond to the crisis, announcing on March 7 that it would write off €1 billion in loans and interest related to the project. These five companies financed half of the costs of building the $11 billion pipeline, with Russia’s Gazprom paying the rest.

The Nord Stream 2 project has seen serious delays and suspensions in the past, including as a result of subsequently-waived 2018 United States sanctions that prompted 18 European companies (including Wintershall) to pull out of the project. However, Western stakeholders are not the only ones seemingly pulling back from the project in the current context. The German division of Gazprom subsidiary Nord Stream 2 AG, which built the pipeline, announced that it would start the process of closing down. This move followed talk of Nord Stream 2 AG itself filing for bankruptcy. The company did not confirm this move but did state that it had laid-off employees. 

With the apparent exodus of stakeholders on all sides, no signs of Russian de-escalation in Ukraine, and no clear prospects for the pipeline’s financial or geopolitical future, it is unlikely that Nord Stream 2 will go into operation in the near- to medium-term, if at all.


After Russia invaded Ukraine on February 24, gas prices spiked by 50% day-on-day, sparking worries that Europe would face an imminent energy crisis. However, when the Nord Stream 2 process was halted, German energy operator E.ON rejected demands to halt Nord Stream 1 pipeline operations, meaning that Russian gas could continue to flow directly to Germany. What’s more, existing demand on the European side arguably did not necessitate an additional pipeline and had gradually been in decline since its peak in 2019. The EU has been striving to meet its climate goal of reducing gas usage by 25% from 2015 to 2030, although gas is expected to remain a significant part of the bloc’s energy mix. 

Even before the current crisis, gas flows to Europe had declined sharply, causing prices to rise, and gas storage levels to be supplemented with liquified natural gas (LNG). While LNG is more expensive, and the capacity and reach of LNG regasification ports are currently limited, recent price spikes for pipeline gas could render investment in LNG and related infrastructure a more feasible part of a larger diversification strategy.

Indeed, days after the Russian incursion into Ukraine, Germany and the EU announced new measures to reduce dependence on Russian gas, including building new LNG terminals, increasing storage requirements, and bolstering efforts to turn toward renewables. European analysts believe that Europe could survive through summer 2022 without Russian gas, but would be subsequently forced to make difficult policy decisions and face major economic consequences such as factory closures. If gas flows to Europe were to be halted by either Russia or the EU and recent measures are implemented effectively, the economic bloc and Germany would likely stave off the worst effects of an energy crisis, but bear the brunt of high domestic costs in infrastructure and household energy bills. Although the European Commission outlined a plan to slash Russian gas imports by two-thirds within the year, no measures have yet been taken to cut off these flows entirely.

Meanwhile, as of February 24, gas flows via Ukraine to Slovakia had so far been unaffected by the Russian invasion, although levels had nearly halved from December to mid-February. Ukraine is already facing an acute energy crisis which is likely to worsen as the invasion continues, and there is no reason to believe that gas disruptions would not become an additional weapon in the country’s arsenal to pressure Ukraine in the event of an extended war or a partial or complete defeat of Russian forces. Russia had previously disrupted gas supplies through Ukraine in 2006, 2008, and 2014, sparking major shortages in Europe. Although a recent explosion near a facility in the city of Kharkiv did not ultimately halt gas flows, additional direct targeting of gas infrastructure is also not out of the question. Any short-term or permanent disruptions would not only threaten European gas supplies but deal a major blow to Ukraine’s energy security and exacerbate the besieged country’s current woes.


Revenue from hydrocarbons accounts for 60% of Russia’s national budget, and oil and gas for approximately a third of its gross national product. Nevertheless, Nord Stream 1’s continued operations, as well as those of the pipelines through Ukraine and Belarus, mean that current gas revenues from Europe will likely be maintained barring purposeful disruptions by Russia or measures by European countries to stop. On the European side, at least, the flows are likely to continue. Although the United States has announced a ban on Russian natural gas imports, the US imports only a fraction of Russian hydrocarbons, and parallel measures have not yet been levied by the principal customers in Europe. Facing the domestic challenge of rising energy prices, it is unlikely that the EU will stop existing flows from Russia entirely in the near term. 

Europe is also not Russia’s only source of hydrocarbon revenues: Russia recently signed a 30-year contract with China to build a pipeline and supply gas. In the current context of large-scale conflict, it is also unlikely that the absence of an additional gas supply route will prevent Russia from disrupting flows through Ukraine, which was initially one of the most significant geopolitical concerns with the project. In all, the suspension of Nord Stream 2 will likely have a minor effect on existing energy trends, the Russian economy, and attempts to move away from dependence on Russian gas in Europe. Other measures such as banning Russian banks from the SWIFT banking system will likely have a far greater long-term impact on Russia’s economy and geopolitical calculus.

Any views and opinions expressed in this article are those of the author and do not necessarily reflect the position of Internews.