Energy policy of Trump and Putin: Allies or rivals?

Author : Natalia Slobodian

Source : 112 Ukraine

After the meeting with Putin in Helsinki, US President has relaxed his tone with regard to the Russian gas pipeline
10:10, 18 July 2018

Read the original text at  


Since June 28 this year, all the eyes have been turned to the meeting between Trump and Putin. For three weeks the experts have been trying to predict the themes that might be discussed, the position of the negotiators on the most sensitive problems, the style of the conversation, and its possible consequences. However, yesterday it became clear that we did not receive answers to most of the questions. And now we seem to have more questions we did before the meeting. One of them is the Nord Stream – 2 issue and the energy policy of the US and Russia. Let us try to analyze the future trends of the energy diplomacy and how this would affect Ukraine.

Related: What did Putin and Trump agree on in Helsinki?

During the NATO summit, the American president has stated that Germany receives too much energy from Russia (about 60-70%) and is in its captivity (“Germany is captive of Russia”), and also urged NATO to take a strict look at the North Stream - 2, which can threaten the security of the Alliance. It would seem that Tramp's tough stance on the German-Russian project will continue in the dialogue with Putin. But to the journalist's question concerning the prospects of the scandalous gas pipeline, Putin actually answered for Trump, who, in fact, addressed this question. The head of the Kremlin said that he and his vis-à-vis have different views on this project, but Putin is ready to assure his American counterpart that Ukraine would not lose gas transit after the launch of the new gas pipeline as soon as the commercial dispute between the two economic entities in Stockholm is resolved.

Related: The US to compete with Nord Stream 2, - Trump

What did Nord Stream – 2 mean for Trump and what goals were set for the head of the White House? The tough rhetoric of the American president and even talk about the prospects for sanctions against the mentioned project looked like the second phase of the US-EU trade war (after the introduction of tariffs for steel and aluminum). In fact, Nord Stream – 2 is a dangerous competitor for the development of the European liquefied gas market. No doubt, the United States is interested in expanding the LNG market in Europe, developing sustainable demand and increasing sales. However, the price competition between gas from the pipe and LNG is not in favor of the latter. Numerous conclusions and reports of the American think tanks that the new gas pipeline from Russia is a political project aimed at the dependence of the EU countries on its northern neighbor did not affect the European partners in any way. European partners did not take into account the recent statement by US Secretary of State Mike Pompeo, who noted that the increase in the volume of the American LNG to the EU countries would violate Russia's monopoly positions in regional markets and could force Russia to withdraw.

So, there are two problems in the present EU-US relationship: the introduction by the United States of tariffs for the EU’s steel and aluminum and the threat of sanctions against the Nord Stream-2 project. Thus, Trump can offer the European partners an agreement: the White House softens the restrictions on the export of steel and aluminum from the EU countries, in return, the European partners refuse from the Nord Stream – 2 project or at least freeze it for a certain time, for example for some  5-7 years. The problem is being solved in the economic sphere, that is, the United States is increasing production and developing the LNG market, fixing the status of an energy superpower. Instead, EU countries continue their most profitable export to the United States without any economic losses.

Related: NATO summit: Demarche of Trump and conclusions for Ukraine

However, after the meeting with Putin in Helsinki, US President Donald Trump relaxed his tone with regard to the Russian gas pipeline. "We are going to sell LNG and compete with the pipeline, and I think that we will successfully compete, although there is a slight advantage at the local level, as Russia is closer to the European buyers," Trump told. Perhaps, someday we will hear a more constructive explanation from the American leader how he plans to compete with the Russian Federation for the European gas market. Of course, Trump can behave quite delicately during a joint press conference with Putin, but this does not mean a warming in relations with Russia, a departure from national interests and a virtual change of foreign policy.

Putin's statement on the fact that he sees some perspectives for cooperation with the US in the energy sector was really interesting. To continue his thought, he set an example of Ukraine and the possibility to prolong the gas transportation contract, which ends in 2019, in the event of a dispute between business entities in the Stockholm Arbitration. However, it is unclear what he is talking about.

Related: Gas talks in Berlin: Russia, Ukraine admit necessity of new contracts, - Sefcovic

After all, two disputes between Gazprom and Naftogaz, namely under the contract for the supply and transit of gas, have already been resolved in the Stockholm Arbitration in favor of the Ukrainian side. And, in fact, we are currently in the process of collecting debts from Gazprom. But the problem is that Gazprom is not fulfilling the decision - it does not pay a debt of $ 2.6 billion and does not sell gas at a price, set by the arbitration. Now, the Stockholm Arbitration is considering a new lawsuit filed by Naftogaz on the revision of the transit tariff, and it is almost impossible to settle it concurrently with the end of the transit agreement between Ukraine and Russia, that is, until the end of 2019. The shortest period is the end of 2020. So, when we take into account two factors, Putin's statement on the extension of gas transit through Ukraine after the Stockholm Arbitration, that is, the end of 2020, and the end of the Ukrainian-Russian transit agreement in 2019, the question arises: what will happen in 2020? Is Russia preparing for a new gas crisis? And is it possible to trust Putin's public assurances regarding transit guarantees through Ukraine, which he formulates in a conditional sentence?

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

Система Orphus

If you find an error, highlight the desired text and press Ctrl + Enter, to tell about it

see more