[HN Gopher] Nord Stream 2 owner considers insolvency after sanct...
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Nord Stream 2 owner considers insolvency after sanctions
Author : mudro_zboris
Score : 47 points
Date : 2022-03-01 14:34 UTC (8 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| mensetmanusman wrote:
| Let Ukraine operate the pipeline to repair their infrastructure
| damage.
| sonicggg wrote:
| There's something I don't understand about the Russian actions.
| They knew sanctions were coming, they clearly prepared years
| ahead for this war, maybe since Crimea. They gathered enough
| reserves, and built closer ties with China.
|
| At the same time, they invested so much money on this pipeline,
| and attacked even before it was operational. Now this "Swiss"
| puppet company, which is also owned by Russia, is folding like it
| was caught by surprise.
| MisterSandman wrote:
| They probabaly didn't expect this project to completely die
| down like I did. I think they expected there to be sanctions
| similar to Crimea, most of which were weak and/or overturned
| eventually.
|
| And by "they" I mean Putin, because I'm pretty sure anybody
| with half a brain cell should've known that invading a country
| after a global pandemic was bound to get some backlash from the
| rest of the world.
| s1artibartfast wrote:
| The rational answer is simple:
|
| They hoped that it wouldn't come to war, and were willing to
| risk the pipeline if it did. In the grand scheme, Russian
| national security goals trumped the economic factors.
|
| There is an alternative narrative, which is possible but I
| don't believe:
|
| Putin is simply evil and/or crazy, and therefor completely
| irrational.
| yrgulation wrote:
| They are as well prepared as their army: propaganda and not
| much more.
| Traster wrote:
| Up until last week Germany showed no signs of seriously
| opposing Russia, they spent nothing on their military, they
| made their Russian oil essential to their energy policy (to the
| exclusion of nuclear) and senior former politicians lobbied for
| Russia.
|
| It was perfectly reasonable for Russia to think Germany
| couldn't afford to dump NS2 (Russia had been deliberately
| running down reserves for 6months). The problem is that
| Russia's actions galvanised Europe in a unique way. Suddenly
| Germany is more sceptical of the Russians than the Brits are,
| and the brits have very little on the line in comparison.
| fabian2k wrote:
| While there is plenty to criticize about our previous
| strategic decisions in this area, no gas has ever flown
| through NS2. There's a lot of bad faith arguments going
| around here.
|
| NS2 was controversial in Germany from the start, it was a bad
| idea politically because it weakened the position of the
| eastern european states. But it was not the bogeyman than
| many made it out to be.
|
| Germany needs gas for heating, and heating is not optional.
| Heating is also expensive, and making it more expensive for
| strategic reasons is a very hard thing to sell.
| aurizon wrote:
| Yes, invoke bankruptcy, buy the assets for .01% of value gazprom
| takes it over
| HWR_14 wrote:
| Gazprom already owns Nord Stream 2 AG, the legal entity that is
| talking about filing
| aurizon wrote:
| I believe it is a joint project with a UK or US partner -
| squeeze out the UK/US partner?
| HWR_14 wrote:
| There were several partners involved in financing, for
| instance Shell.
|
| >squeeze out the UK/US partner?
|
| Quite the opposite. Gazprom is the only shareholder. That
| means they'll be the lowest on the repayment schedule. I
| assume the financing partners have some form of debt.
| Therefore, the most likely outcome is that the pipeline is
| auctioned off, and the revenues of that go directly to
| Shell etc, and Gazprom gets nothing. The various partners
| may also offer Gazprom a fixed sum right now for their
| shares.
|
| It's worth noting that the Swiss company itself, because it
| is owned by Gazprom, is falling under sanctions tomorrow.
| So, this isn't a result of people not wanting to by Russian
| gas as much as no one wants (or will be allowed) to have
| transactions with the pipeline after tomorrow.
| Arnt wrote:
| I think you forget that Gazprom is now wildly unpopular in
| Europe. That gas will be buyers' last choice, bought only if
| there's no other option. What's the value of a pipeline if the
| only product it carries is that unpopular?
| yariik wrote:
| Yeah you can bet that the 8000$ per m3 gas delivered from
| Qatar via the United States is going to become very popular,
| after Gasprom is no longer able to receive payments from its
| customer, and subsequently stops all of its supply to Europe.
| Well, this new $8000 gas will surely have molecules of
| freedom in it, unlike that authoritarian Putin's gas. But for
| how long will Europeans be willing to put up with prices like
| this?
| throwawaymanbot wrote:
| Arnt wrote:
| If I understand you correctly, your opinion is that 1 LNG
| will be much more expensive than Russian gas in the coming
| decades and 2 Europe cannot reduce its gas usage enough to
| make that extra cost politically acceptable. Is that
| correct? If so, my answer to "how long" is "enough to
| depress the value of that pipeline considerably from its
| valuation as of two weeks ago".
| 988747 wrote:
| LNG being much more expensive is pretty obvious -
| transportation costs are something like 90% of the final
| price. Pipelines are much more effective means of
| transportation for such things - build once, use for
| decades, at almost 0 marginal cost.
|
| Reducing gas usage is entirely different topic, it would
| require to either: invest heavily in nuclear or:
| reopening of coal-powered plants.
| jankeymeulen wrote:
| Belgium (my country) imports about 400% of its domestic
| use in LNG, to then sell it to neighbouring countries via
| pipelines. Doesn't make sense if LNG was too expensive.
| croes wrote:
| Without russian gas the demand will skyrocket.
|
| LNG is that masses will be expensive and environmental
| harmful because of the transportation by ship.
| croes wrote:
| The product is popular, the seller isn't.
|
| A few middlemen and all is well.
|
| That or when enough time has passed after the war.
|
| We don't have a problem with Saudi Arabian oil, no matter
| what happened with Kashoggi, Yemen or Raif Badawi.
| krageon wrote:
| > bought only if there's no other option
|
| Which is the case.
|
| > What's the value of a pipeline if the only product it
| carries is that unpopular?
|
| The value is in having options.
| Arnt wrote:
| Which is the case today, but the value of an investment
| like this pipeline is based on a forecast of several
| decades. On that timescale, the pipeline competes with
| every kind of power plant.
| [deleted]
| waynesonfire wrote:
| Such an ignorant short sighted response.
| Arnt wrote:
| You think, perhaps, that I've overlooked that Russia is the
| only viable source for the gas now?
|
| This pipeline has an expected lifetime of around 50 years.
| The availability or non-availability of other power sources
| this year doesn't matter very much for the valuation of the
| pipeline. My assumption is that the current political
| situation will lead to a stronger push towards other energy
| sources, chiefly renewables but also LNG. And as a
| consequence, that this will depress the use of the pipeline
| for at least 45 of its expected 50-year lifetime. With
| obvious implications for its present valuation.
| Ajef wrote:
| While the other responses to your comment have given some
| aspects that seem applicable to me. I'd like to add the
| aspect of marketing. There is most likely some subsidiary of
| gazprom that sells Gas as more clean than coal approach and
| hides it's ownership to those that don't do their homework.
| Besides there being no real alternative to russian gas in
| central Europe most people will not research who is behind
| the name on the bill.
| Arnt wrote:
| I thought about that too, and decided that it's not
| significant.
|
| That pipeline ends on the north coast of Germany. Its
| customers will have to be in 10-20 countries surrounding
| Germany, and energy sources are long-term decisions made by
| boards of directors rather than mid-level managers.
| Consider the next five years. Which energy company board in
| those countries is going to discuss two suggested
| investment plans, one that involves Gazprom and one that
| involves anything else, and pick Gazprom over an
| alternative?
| Ajef wrote:
| Perhaps, my current opinion is: Many people don't care
| enough about politics at all to consider it a factor and
| maybe that changes with the situation in Ukraine but I'm
| not convinced. Will politicians put pressure on the
| companies, maybe more likely. In which case you are still
| right.
| croes wrote:
| If people would care most couldn't afford things like
| driving a car.
|
| Too many resources come from non democratic countries
| with a lack of human rights.
| Ajef wrote:
| I think this is an interesting situation.
|
| The article states the pipeline is indirectly owned by gazprom.
| Which for the sake of argument I'll assume Russia/Putin has a
| certain amount of control over. Filing for insolvency is a legal
| requirement under certain financial situations. Reading the
| article it's unclear to me whether this is a political message or
| an attempt of the company to comply with the law. As it's just
| "considerung" insolvency it might be a political message
| regarding Russian willingness to provide gas going forward.
|
| Imho a very interesting development.
| Borrible wrote:
| Providing secure gas via Nordstream One, Jamal Europe/Jamal,
| Sojus/Transgas, albeit the mess: Let's talk, everything could
| be fine between us.
|
| Showing the Nuke card: 'Fuck off, this is not your business.'
|
| Carrot.
|
| Stick.
|
| You want something, I want something.
|
| Oh, and of course sow a fair amount of discord between Western
| allies. The Russians are waiting for the first Germans to say:
| "Look, they keep their word. Even if they are currently raping
| Ukraine, okay. But, then again, you know she dressed
| provocatively."
|
| Wait until Germany has taken a few hundred thousand Ukrainian
| refugees and faces an inflation around five to seven percent.
|
| Not to forget, this crisis will get cold, governments in the
| West will change and you have to get along again. Who knows who
| handles the White House in a few years.
|
| Wasn't so bad, was it, luv?
|
| Did you know, showing the Nuke stick early (Escalate to De-
| Escalate) is said to be an invention of a certain meteoric
| risen Russian politician in his time as Secretary of the
| Russian National Security Council around 2000?
|
| A brilliant method to madness.
| Ajef wrote:
| I'm not sure I understand the meaning of your response
| particularly but I'll try to give my perspective.
|
| Unless the nuclear war is propagated a lot more in the media,
| I don't believe most Germans will take it seriously... for
| now. We currently have no nuclear weapons so from my
| perspective it's out of our hands anyway. Just because Putin
| mentioned it doesn't mean Germans see it as realistic. I can
| obviously only speak for myself but noone in my surrounding
| has mentioned it as anything more than political leverage.
|
| Regarding sewing discord between western allies: The
| nordstream pipeline has been a point of contention between
| western allies and quite controversal in inner german
| politics. I don't see that changing, if/when the pipeline is
| used there will be outcries from allies and within Germany.
| Economically the choice might be made anyway because the
| energy prices in Germany are just extremely high and not all
| gas usage can be replaced by other sources.
|
| Regarding refugees, it's hard for me to estimate the impact.
| This is honestly something i feel i should research a bit. My
| opinion is that short term such changes in population can
| have unforseen effects. Long term I believe it helps Germany
| with it's declining population. All the arguments regarding
| culture etc. don't mean much to me personally as all that
| changes over time anyway and clinging to some notion of
| culture tied to a geographic location is presumptuous. If you
| want a certain culture in your life.. then live that way.
| Borrible wrote:
| Yes, but you probably aren't Putin, you probably aren't
| Russian and you are probably powerless in a geostrategical
| or any other meaningfull sense. Like most people on this
| planet. Which makes a big difference for thinking.
|
| And as I have already indicated, a method to madness
| implies above all .... Madness. And a system that selects a
| certain amount of madness as a means to national power. His
| frame of reference is obviously quite different from yours.
| And so, probably, is that of his close environment in
| Russia's power apparatus. That means, they could have
| stopped this beforehand if they wouldn't have the same
| method of thinking.
|
| Beside, that 'Escalate to De-Escalate' thing which Putin
| may have introduced into the Russian discussion of its
| nuclear doctrine, involves the use, not just the threat,of
| a tactical nuclear weapon to stop an escalation of
| conventional war or if things go too badly. Just small
| enough that the Russian apparatus does not believe in
| nuclear retaliation by other nations. A surprisingly last-
| minute test of a small tactical nuclear bomb, that sort of
| thing. Or one in the atmosphere above the baltic sea, who
| knows.
|
| This concept does not even require an immediate threat to
| Russian territory from enemy forces, i.e., their invasion.
| Which is their official doctrin for the use of nuclear
| weapons.
|
| In short, it doesn't matter what you think, nor what I
| think. It matters what Putin and his cronies think. And
| obviously, nobody really knows what they think or are
| capable of. And what they even care to consider as a
| reality.
| anonAndOn wrote:
| > sow a fair amount of discord between Western allies
|
| From my outsiders perspective, I have never seen Europe so
| unified. Putin has inspired an astonishing amount of
| camaraderie amongst his western neighbors.
| belval wrote:
| That's what I don't get about the whole situation. Putin
| always seemed like an intelligent man, that understood
| Russia's strengths and weaknesses. I would've thought he
| would try to divide the EU significantly before invading
| Ukraine.
|
| Whether or not he takes Ukraine is pretty much irrelevant
| now. They will have the equivalent of a warmonger penalty
| for at least a decade. I wonder if there is any truth to
| the rumor that he is sick, that's the only way I see that
| the whole puzzle fits.
| anonAndOn wrote:
| When Finland starts saying "we really should consider
| this NATO thing", anti-war Germany says "we need lots
| more tanks!" and even the Swiss say "we are neutral to
| everyone but you" (all in one week!!!) the people around
| him MUST realize just how badly Putin has fucked up.
| BongoMcCat wrote:
| It's the same from an inside perspective.
| yrgulation wrote:
| Here is an interesting fact about the Nord Stream AG CEO:
|
| "He is a former officer in the Stasi." and "an ally of Russian
| President Vladimir Putin"
|
| Funny how most of these former communist secret service agents
| are all involved in shady business. This is common to all former
| communist countries, east germany included. The former soviet
| aligned block somehow generated a lot of these types and i fail
| to understand why. Is it because communist suppression regimes
| relied on criminals in their early stages, and as such, they
| bubbled up into leadership positions? Or is it simply that they
| had access to information regular people didnt? But still I dont
| understand why they chose a shady / criminal path.
|
| [1] https://en.m.wikipedia.org/wiki/Matthias_Warnig
| [deleted]
| retrac wrote:
| People willing to take initiative and sieze control of state
| property by whatever means they could, prospered during the
| chaos of the USSR's breakup. They were often cliques within the
| Soviet power system, KGB, Communist party officials, both in a
| position to see where things were going and with institutional
| access.
| mywittyname wrote:
| So, what's the likely outcome here?
|
| The pipeline is built and presumably functional. It seems like
| the pipeline will be put into use once this business with Russia
| is over.
| Ajef wrote:
| > It seems like the pipeline will be put into use once this
| business with Russia is over.
|
| Imo, which is without any particular info of the industry: It
| will probably be put to use, however perhaps not to it's full
| capacity. Germany has high energy prices, which there is no
| indication of going down in the forseable future. So it seems
| particularly unlikely it would not be used at all. Germany is
| trying to reduce it's dependency on russian gas (for example
| via LNG). But Germany opting out of coal and nuclear fission
| power - energy prices won't, imo, go down.
|
| You say "once this business with Russia is over". Current
| events from my German perspective imply they won't be over no
| matter what outcome... things just change going forward.
|
| If Germany remains on the no nuclear front then France will
| build more nuclear power on the boarder that Germany will buy
| at a premium. Dependency on russian gas will go down no matter
| what, the next winter might be financially tough though. In
| that regard "selling" the nord stream pipeline via insolvency
| now or later at declining usage - it's valuation I can only
| guess at.
|
| From a non-financial position the pipeline gives certain power
| as long as Germany has a dependency on russian gas -> it's
| worth might be different to Russia than just viewed
| economically.
|
| In another post I mentioned that this article says "considers"
| insolvency. Therefore it might just be political message for
| now or a leak of something companies with financial
| difficulties are legally required to do... so all this is
| honestly just a thought experiment.
| cmarschner wrote:
| It takes in the order of 20 years to build new nuclear power
| plants.
|
| By then fission will be stone age from an economic point of
| view, PV and wind will be much cheaper than they are now,
| electric vehicles can serve as batteries on the grid, and a
| lot of infrastructure will have been converted from gas to
| hydrogen.
|
| In other words, it makes no sense to think about fission at
| this point.
| sschueller wrote:
| I will be interested to see if the US will still be so
| vehemently against it.
| cr1895 wrote:
| It is a strong incentive for the US to sell and ship LNG to
| the EU.
| anamax wrote:
| The US had a strong incentive, but the Euros preferred "not
| US" suppliers.
|
| Then the US decided that it didn't want to be in the energy
| exporting business.
| retrac wrote:
| It depends very much on how the situation ends, and how
| quickly. A simple return to status quo ante bellum seems
| implausible now.
|
| Russia becoming a hermit kingdom cut off from Western trade for
| a significant time seems a distinct possibility. Germany has
| already announced they plan to eliminate their dependence on
| fossil fuels for electricity by 2035 [1] and to increase
| imports from the USA until then. Europe was already moving away
| from fossil fuels for climate reasons. The war gives a security
| justification for accelerating that course even if it impacts
| quality of life, the economy, or even climate goals. [2]
| European energy independence just became a primary goal of
| unlikely to change even if the immediate tensions ease.
|
| Assuming this materializes and relations allow, the pipeline
| may end up mostly exporting via European ports. So you're right
| it'll probably get used one way or another, eventually.
|
| [1] https://www.reuters.com/business/sustainable-
| business/german...
|
| [2] https://www.reuters.com/business/energy/germany-step-up-
| plan...
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