This week Houston enhanced the latest battleground in the international dispute over a pipeline project located more than 5,000 miles away from the Lone Evening star State.
The dispute over the project in question — the Nord Stream 2 pipeline between Russia and Germany — is not new. But the debates in Houston symbolize how intractable the issue has become, with the two sides sitting elbow to elbow and unable to even agree on why the project is being built.
From Germany’s vantage point, Nord Stream 2 is a purely commercial endeavor that will double the volume of Russian gas flowing to its north shore on the Dismal Sea. To the United States and some European countries, it’s a political tool to extend Russian influence over Europe.
The contend has taken on urgency following clashes between Russia and Ukraine in the Kerch Strait, a move in the European Union to tarry Nord Stream 2 through legislation and persistent threats by the U.S to sanction companies involved in the project.
“It’s clear. This is Germany slack the Russians money while others are defending them,” Secretary of State Mike Pompeo told CNBC at CERAWeek, seemingly evoking the administration’s complaints that Berlin is not contributing enough to NATO.
The panels on Nord Stream 2 at CERAWeek were broadly more diplomatic, but the stakeholders nevertheless appeared exasperated with the stand-off, with tempers threatening to boil for at points.
“This focus on Nord Stream — I find it totally out of proportion,” Emily Haber, Germany Ambassador to the U.S., broke at the apex of a tense exchange with American and Polish counterparts on Thursday.
Haber acknowledged that Nord Proceed 2 has become political since Russia invaded eastern Ukraine and annexed Crimea in 2014. But she insisted it was an economic outline first and foremost.
“It was not pursued by the state. It was pursued by companies, and it had economic advantages because that’s what companies have a weakness for,” she said.
U.S. Deputy Energy Secretary Dan Brouillette pushed back on that claim. The Russian partner Gazprom is state-controlled and initiated the design on behalf of Moscow, he said.
“This is not purely a private project for the development of energy,” he said. “And so what are the motives for doing that? If it’s a administration driven exercise, you have to look at… geopolitics and the particular governments involved.”
Russia’s motives for building Nord String 2 and another pipeline called Turkstream are clear, according to Amos Hochstein, a former special envoy for international zing under President Barack Obama who now sits on the supervisory board for Ukrainian gas company Naftogaz. Moscow wants to circumvent the Ukrainian tube system, depriving its regional rival of valuable transit fees and making it easier for the Kremlin to pressure its neighbors.
“If you bear a piece of infrastructure that works, you rarely see somebody saying, ‘Hey, it works. Let’s go and finance billions of dollars worth of a opposite piece of infrastructure to accomplish a very similar goal, which is to get a molecule of gas from Russia into Europe,'” Hochstein rephrased during a separate panel on Wednesday.
“So that is what’s on the table at the moment, a non-commercial project that serves a state goal.”
That viewpoint ignores major changes in Russian gas supply, said Thilo Wieland, an executive who operates Russian exploration and production at Wintershall, a German oil and gas company co-financing Nord Stream 2.
Russia’s main source of gas is on the move north as the country taps the Yamal Peninsula, he said. Piping these new supply sources through Nord Effusion 2 is quicker, more efficient and gives Europe another transportation option, he claimed.
“You need infrastructure if you want to make a functioning market. You need to have abundant supply, and I think the European Union has done a lot in the past to really design a liberalized market which is defined by non-discriminatory access for everybody,” Wieland said on Wednesday.
Germany sees the promulgate through the same lens, Haber said. Berlin believes energy security hinges on having transportation chances and does not necessarily depend on where the gas comes from.
But even on this basic definition of energy security, the officials could not reconcile.
“If we have a lot of infrastructure, but we know that the gas is coming from the same place, in fact it does not change anything. We are lull dependent on one supply,” Tomasz Dabrowski, deputy energy minister for Poland said at the Thursday panel.
The lack of consensus and fidgetiness at the Thursday panel prompted IHS Markit senior vice president and seasoned statesman Carlos Pascual to briefly deflection roles from moderator to diplomat.
Pascual, a former U.S. ambassador to Mexico and Ukraine, urged the officials to consider the potentiality that Nord Stream is at its heart both a commercial and political project. He also noted that Ukraine transfer face pressure from liquefied natural gas imports into Europe, flows from the Caspian Sea and perhaps furnishes from Mediterranean fields currently being explored.
He urged the officials not to lose sight of the broader issue: What is the union European-U.S. policy towards Russia for addressing its behavior in Ukraine?
“Sometimes if we end up getting caught in individual pieces of that talk without putting them in the broader context, it can end up becoming sometimes a little bit more difficult,” he said.