Via Stratfor (subscription required), analysis that continued public German efforts to defend the Nord Stream pipeline project, a joint venture between Berlin and Moscow, in the face of attacks from other states and signs that even the Russians do not think the project is viable anymore may not be geared toward the pipeline as much as it is aimed at pacifying the Kremlin while Berlin looks for ways to ease its dependence on Russian natural gas.  As the report notes:

“…Nord Stream (formerly called the Northern European Gas Pipeline, or NEGP) was originally dreamed up by Russian state natural gas monopoly Gazprom and has been in the works for more than a decade. Nord Stream is projected to run from a natural gas hub north of St. Petersburg, Russia, across the seabed under the Baltic Sea and to northeastern Germany, where it would link into the German distribution network. The pipeline would supply 55 billion cubic meters of natural gas, drawing its supplies from the proposed giant Shtokman natural gas field in the Arctic Sea. Currently, Nord Stream’s consortium members are Gazprom (51 percent), Germany’s BASF (20 percent), Germany’s E.ON (20 percent) and Dutch firm Gasunie (9 percent).

Russia has never hidden its motivation for the project. Officially, Nord Stream has been promoted as a geopolitical project to secure natural gas supplies to Europe, as the Central and Eastern European states that transport Russian energy to Europe have been deemed unreliable. But for the Russians, the project has political purposes as well. First, Moscow is looking to make Germany utterly dependent on Russian natural gas. Germany currently is one of the world’s largest energy consumers and receives 46 percent of its natural gas from Russia. Moscow’s goal is to push that dependency up past 60 percent. In the Kremlin’s eyes, such dependency would make Germany want to stay on Russia’s good side, thus fulfilling Moscow’s political objective of keeping Berlin in line.

Russia’s second goal is to cut off natural gas to those politically tricky states that transit natural gas to Germany (such as the Baltic countries, Poland, Ukraine, Belarus and other Central European states) without harming Germany. This would allow Moscow to exert pressure on its peripheral states while independently maintaining good relations with Western Europe.

But there are myriad obstacles to Nord Stream even getting off the ground.

For one, there is the cost. Gazprom has said it can build this line — which would be the world’s largest-ever underwater natural gas pipeline — for approximately $5 billion to $9 billion, though it will most likely cost more than $20 billion. There also has been no agreement within the consortium on who exactly would pay for the line. If it were to cost merely $5 billion, the members would most likely have no problem agreeing about payment. But neither the Dutch, the Germans nor the Russians are fooling themselves about projected costs — and thus an agreement on payment still is up in the air.

The next roadblock is the cost for tapping the Shtokman natural gas field. Shtokman is a highly ambitious project in the Arctic offshore, projected to cost $20 billion-plus to get running, but with an estimated 3.7 trillion cubic meters of natural gas reserves. The plan is to feed Shtokman natural gas directly into a pipeline that runs to shore, and then send a portion through Nord Stream and the rest through a proposed liquefied natural gas (LNG) facility for consumers beyond Europe. Shtokman is proposed to be up and running by 2013, though Nord Stream is slated to be completed by 2011 (but both projects are already five years behind their original launch dates). However, Shtokman will be one of the more technically difficult fields in the world to tap and is also running far behind schedule. A Shtokman consortium consisting of Gazprom, France’s Total and Norway’s Statoil has only recently formed, and as with the Nord Stream line, there is no deal yet on who will pay for the project.

A third problem lies in running Nord Stream through the Baltic Sea, which would require the approval of the states lying along the sea. The northern European states — the Baltics and Poland — have very loudly said that they disapprove, since the line is meant to cut them out of supplies. The Scandinavian nations of Finland and Sweden are also against the line, but are using the excuse of environmental concerns to make their case because they prefer not to stand up to Russia outright.

The Germans and Russians are really the only ones who seem to be on board with the project; both have staunchly defended it over the past few years. But this might not be the case any longer. The Germans might be publicly standing up for the project, but Berlin knows that the line has too many barriers and is really not interested in paying a lot only to become more dependent on Russia. The reason Germany continues showing support for Nord Stream is simple: Berlin is looking to pacify the Russians so that it does not have to implement a policy of confrontation — even if it is bald-faced lying about wanting Nord Stream. Like the rest of Europe, Germany is actually looking for ways to decrease its dependence on Russian natural gas, not increase it. Germany also does not want to pursue a project that would harm its fellow EU members that would be cut out of the energy supplies.

Now it seems that the Russians have caught onto Germany’s stalling tactic. On Nov. 12, Russian Prime Minister Vladimir Putin stated that Europe needs to decide whether it wants the pipeline project. Putin followed this statement with a semi-veiled threat that if Europe does not need the pipeline, then Russia will build a LNG facility instead, which would allow Russia to send its natural gas to other consumers outside of Europe. However, this does not quite compute, since Russia does not yet have the technological know-how to build a LNG facility.

In the end, the most important thing is that all parties are now starting to admit that the elaborate Nord Stream project might just be a little too complicated to complete. And the Russians might have to find another way to increase their energy leverage in a Europe that is looking to diversify its energy sources.”