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U.S. deeply concerned Nord Stream gas link is security threat

Fri, 06th May 2016 18:03

* U.S. envoy says Nord Stream-2 has no commercial logic

* Says enormous amount of LNG will be available

* Backers of Nord Stream-2 say it is commercial, notpolitical

BRUSSELS, May 6 (Reuters) - The United States is deeplyconcerned about the Nord Stream-2 gas pipeline project as athreat to national security, a senior U.S. energy envoy said onFriday, after the issue was raised at talks in Washington thisweek.

Since its conception last year, the Nord Stream-2 project todouble the volume of gas shipped directly from Russia to Germanyhas triggered strong reactions.

Many EU governments complain it increases dependency onRussia's Gazprom, which supplies around a third of theEuropean Union's gas.

The issue was raised at a meeting in Washington this week ofthe U.S.-EU energy council, a body set up to debate security ofenergy supply following the 2009 gas crisis when Russia cut offgas supplies to Ukraine, with knock-on effects for the EU.

"Our commitment to energy security in Europe is directlylinked to our concern for national security," Amos Hochstein,U.S. special envoy and coordinator for international affairs,told journalists in a conference call.

"The U.S. is deeply concerned about a pipeline that wouldendanger the economic viability of Ukraine," he said, adding itwould "deepen the rift between East and West".

Ukraine, the main transit route for shipping Russian gas tothe European Union, has been locked in conflict with Moscowsince Russia seized Ukraine's Crimea region in March 2014.

The row about how much Gazprom charges Ukraine for its gasis also unresolved.

The Nord Stream-2 consortium, which includes Gazprom, E.ON, Wintershall, Shell, OMV and Engie, says the project is purely commercial and thatRussian pipeline gas is cheaper than liquefied natural gas(LNG), which the United States, for instance, can supply.

But Hochstein dismissed that argument, saying it didn't makecommercial sense for Europe to "double down on physicalinfrastructure that is not accessible to new markets".

"There are enormous amounts of gas coming into the marketover the next five years from Australia and the United States,"he said.

Analysts question how much of that will make its way toEurope rather than Asia, where demand is rising and gas islikely to command a higher price, although a first U.S. LNGcargo arrived in Portugal in April.

Nord Stream-2 is due to be completed by the end of 2019,according to Gazprom. (Reporting by Barbara Lewis; Editing by Susan Fenton)

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