Germany and the US are formulating a joint stance on the controversial Nord Stream 2 Russian gas pipeline ahead of German parliamentary elections on 26 September.
A key consideration for the Washington and Berlin administrations is the future role of Ukraine in handling gas transits to continental Europe from Russia once the pipeline project in the Baltic Sea is complete.
Nord Stream 2, led by Russian state-controlled gas monopoly Gazprom, has already attracted sanctions from the US over its perceived importance to the Kremlin in terms of providing gas revenues.
Russia has been under sanctions over its 2014 annexation of the Crimea Peninsula from Ukraine.
Speaking to reporters at the end of the last week, Germany's Economy & Energy Minister Peter Altmaier confirmed that his government and the US are “committed to reaching a solution by August” on Nord Stream 2.
“There is a lot riding on breaking up this Gordian knot and it is certainly worth working for a good resolution," he said.
Bloomberg quoted an unidentified US officials as saying they expect a draft document on a joint stance to be ready by the time German Chancellor Angela Merkel visits Washington in July.
The US is reportedly proposing that the two countries commit to bolstering Ukrainian energy import infrastructure, domestic biogas projects and compensating Kiev for transit fees that the country will lose if Gazprom halts the flow of gas across the country to Europe.
Speaking in an interview with German publication Der Spiegel, US Secretary of State Anthony Blinken said the White House is “in very active discussions with the German government right now, looking at a series of possible steps, actions and measures that we can take”.
The goal of these measures is to ensure that Nord Stream 2 is not used for “negative purposes, as a tool of coercion or blackmail, and that the interests of countries like Ukraine are protected, both economically and strategically”, he said.
“There are a series of very practical things that we are talking about, and my expectation is that we will agree on important measures that can mitigate any damage that could be done”, Blinken said.
Ukraine's gas imports
Although Ukraine halted direct purchases of Russian gas in 2015, the country still needs to import about 10 billion cubic metres of gas annually.
More than half of that volume is taken from Gazprom’s transit gas shipments to Europe under so-called virtual reverse arrangements with European gas traders that act as intermediaries between Ukraine and Gazprom.
US officials also said that Germany has signaled its willingness to enter into talks with Gazprom on extending gas transit arrangement for Ukraine after 31 December 2024 when the current agreement on Russian gas transit expires.
However, a major point of disagreement remains a US proposal for an automatic halt of gas imports via Nord Stream 2 if the US and Europe see Russia seeking to coerce Ukraine or any other European state.
Even is Nord Stream 2 starts operations later this year, Gazprom will only be able to use half of its annual capacity of 55 Bcm of gas under existing European gas market regulations because the Russian monopoly owns the pipeline.
However, last week, operator Nord Stream 2 said that it submitted an application to be certified as “an independent transmission system operator” to the German Federal Network Agency Bundesnetzagentur, as it seeks to be exempted from such gas market regulations.