How Nord Stream 1 Rewired German Gas
July 30, 2019
Debates about Nord Stream 2 make several assumptions about how the pipeline might affect European gas security. Often missing from that discussion is how Nord Stream 1 changed gas flows—after all, the case against Nord Stream 2 mirrors arguments made a decade ago against Nord Stream. It is thus helpful to examine how Nord Stream affected German and European gas flows.
The data from the International Energy Agency show that net imports into Germany did not change from 2010 to 2018 (Nord Stream came online in late 2011), so Nord Stream altered flows, not volumes. Nord Stream supplied 57 billion cubic meters (bcm) to Germany in 2018. Over half of those volumes affected Germany’s trade relationship with the Czech Republic (a 30.7 bcm net change). Germany used to import Russian gas from the Czech Republic via Ukraine, and now it exports gas to the Czech Republic instead. Until 2014, the gas reached Slovakia and Ukraine, allowing that country to import Russian gas without dealing with Gazprom directly. Now that flow has shrunk, and gas only reaches the Czech Republic. This change in Central Europe is the most important shift caused by Nord Stream.
The other major change was the drop in Dutch gas production and its impact on Germany. Imports from the Netherlands fell sharply from 2010 to 2018 (-18.5 bcm), as did imports from Norway (-7.6 bcm)—allowing Norway to sell more gas to the Netherlands (and muting any rise in imports of liquefied natural gas). These three bilateral flows almost perfectly match the gas that came from Nord Stream. Even so, there were other changes too: Germany imported more Russian gas via Poland (+5.4 bcm), it reduced exports to Austria, and it sold more to Belgium, France, and Switzerland. These volumes, too, almost fully match each other.
In other words, it is hard to look at the data and conclude that Nord Stream 1 adversely impacted European gas security: it reduced transit through Ukraine for a few years, and it eventually allowed Russian exports to rise; but fundamentally, it mostly changed how the Czech Republic receives its Russian gas; it helped Ukraine import non-Gazprom gas; it offset the precipitous fall in Dutch gas production; and insofar as it turned Germany into a hub, it did so alongside the Yamal-Europe pipeline that crosses Poland. Nord Stream 2 will, of course, create its own market and geopolitical dynamics; but a reality check on Nord Stream 1, especially against some dire predictions made a decade ago, might lead to a more rational conversation about Nord Stream 2 today.
