German Chancellor Angela Merkel and Russian President Vladimir Putin are due to meet today in near the capital Berlin and the economic ties between the two countries will be an important topic of discussion. Despite the opposition of the U.S., it is expected that the Nord Stream 2 natural gas pipeline project, which is to transport Russian gas to Germany will be among the focal point of discussion.
Energy trade is the backbone of relations between Russia and Germany. Germany is Russia's largest customer with about 50 billion cubic meters of natural gas imported in 2016.
The Nord Stream natural gas pipeline is in the "leading instrument" of this trade. With an annual capacity of 55 billion cubic meters, the Nord Stream is still the target of hard opposition by U.S. as well as some Eastern European countries, especially Ukraine.
Russia wants to further reduce Ukraine's share in gas transit for the gas it sends to Europe and announced the Nord Stream 2 project as well in 2015.
The project, planned to cost around 10 billion euros, is scheduled to deliver Germany via the Baltic Sea around 55 billion cubic meters of Russian gas annually.
Nord Stream 2 AG, the Nord Stream 2 operator company, reported last month that preparations for the pipeline laying as part of the project were started by the overseas pipeline construction ship "Castoro 10.”
In addition to Russian energy giant Gazprom, the project also involves Western companies such as Shell, OMV, Engie, Uniper and Wintershall, despite the threat of sanctions from the U.S.
US President Donald Trump described Germany's oil and gas deals with Russia as "not very appropriate" in a statement he made in Brussels at the NATO Summit in July, saying, "Germany is paying a high price to Russia for energy. They are a prisoner of Russia.”
Kremlin Spokesman Dimitry Peskov criticized Trump's statement, accusing the United States of making pressure on Europe to sell its own liquefied natural gas (LNG).
After his meeting with Merkel in Sochi at the beginning of July, Russian President Vladimir Putin said, "Trump is a good businessman and promotes the supply of American gas to the European market, but we will fight for the Nord Stream 2 project.”
Though Trump claims that Germany is a prisoner of Russia, the Russian gas accounts for only 10 percent of the German energy mix. In recent years, Berlin has invested huge amounts of money in renewable energy sources, providing energy diversity.
- Germany gives trade deficit against Russia
The frequent meeting of the German and Russian leaders gave impetus to trade relations between the two countries. Despite the stagnation in the Russian economy, trade volume between the two countries rose more than 20 percent over the previous year to 57 billion euros.
Germany's exports to Russia rose by 20.2 percent to 25.8 billion euros at the end of last year, while imports from Russia rose by 18.7 percent to 31.4 billion euros in 2018 compared to the previous year. Thus, trade balance was 5.6 billion euros in favor of Russia due to Berlin's energy imports. Russia is one of the few countries where Germany is having a trade deficit.
By Emre Gurkan Abay in Moscow and Bahattin Gonultas in Berlin