German-US pact on Nord Stream 2 ‘sensible, practical’ outcome: Shell CEO
The recent pact between Germany and the US on mitigating the impact of an operational Nord Stream 2 gas pipeline is a “sensible and practical” outcome that removes uncertainty around the project, Shell CEO Ben van Beurden said July 29.
Germany and the US agreed on July 21 a number of measures to protect Ukraine’s energy security and block any attempts by Russia to use energy as a “weapon” once the Nord Stream 2 gas pipeline starts up.
It paves the way for the completion and commissioning of the pipeline.
“I think it’s a sensible outcome, it’s a practical outcome, and it removes a certain degree of uncertainty that would also affect us,” van Beurden said during Shell’s Q2 results call.
“We are a financial participant in this project and we would like to rely on the good operations of the project to get our debts serviced and ultimately repaid,” he said.
Shell, along with Austria’s OMV, France’s Engie, and Germany’s Uniper and Wintershall Dea, each initially committed Eur950 million ($1.13 billion) to the project, representing around 50% of the cost.
According to S&P Global Platts Analytics, Nord Stream 2 is expected to begin commercial flows in October this year, giving Russia’s Gazprom a new direct supply link to Germany.
Gazprom could choose to divert some of the gas it currently transits via Ukraine into Nord Stream 2. Ukraine remains strongly opposed to the pipeline’s completion, which is expected by the end of August.
Van Beurden said there were “multiple ways” to look at the agreement between Germany and the US from a political perspective.
“But the agreement that Germany has struck with the US — with all the aspects of it including quite a few components to do with Ukraine — is a very strong, sensible, pragmatic and balanced way of looking at it,” he said.
“And let’s be honest, Europe does need a significant amount of gas for some time to come. And the lowest-carbon supplies of natural gas are going to be pipeline gas, whether we like it or not. That’s the reality. The continent simply needs that supply as well.”
Europe is currently seeing record high gas prices, with S&P Global Platts assessing the day-ahead TTF contract at Eur39.80/MWh on July 28, while the day-ahead NBP price topped Eur40/MWh.
High European gas prices, Shell CFO Jessica Uhl said, point to the need for “strong energy policy in ensuring sufficient supplies to support Europe’s energy needs.”