US investor Lynch in talks with Germany on taking over Nord Stream 2

Before relocating to Miami in 2019, Lynch resided in Moscow for two decades. During this time, he was involved in significant financial dealings, including the acquisition of a subsidiary of Yukos in 2007 and the Swiss division of Sberbank in 2022.

WHAT: US investor Stephen Lynch has proposed to the German government launching the Nord Stream 2 pipeline.

WHY: Germany will eventually be incentivised to once more take cheap Russian gas, according to Lunch.

WHAT NEXT: Germany’s government remains opposed to the idea, and the EU plans to sanction the project.

US investor and Trump donor Stephen Lynch proposed to the German economy ministry in May that an US entity acquire the Nord Stream 2 gas pipeline, The New York Times (NYT) reported on June 4, citing unnamed sources. This comes as the European Commission is preparing to propose a package of legislation later this month to eliminate Russian energy from the EU completely by the end of 2027.

According to The NYT, Lynch had earlier floated the idea to the administration of President Donald Trump, believing that Washington would be interested in controlling a key piece of energy infrastructure. Lynch, based in Florida, has been a significant donor to the Republican Party and US President Donald Trump’s campaigns. In 2024, he contributed over $300,000 to Trump’s election efforts. Before relocating to Miami in 2019, Lynch resided in Moscow for two decades. During this time, he was involved in significant financial dealings, including the acquisition of a subsidiary of Yukos in 2007 and the Swiss division of Sberbank in 2022.

A proposal met with scepticism

Despite years of geopolitical tensions surrounding the pipeline, Lynch suggested that the project could be revived over time to supply natural gas to Germany, the newspaper said. German officials, however, have reportedly greeted the proposal with scepticism. The economy ministry did not respond to The New York Times’ request for comment.

Germany's newly-installed Chancellor Friedrich Merz publicly ruled out ever restarting the remaining undamaged Nord Stream 2, stating last month that preventing its operation would “weaken Moscow’s war machine” and “open the way for negotiations.” Furthermore, the European Commission has proposed targeting the pipeline in its next round of sanctions against Russia, and the German government has said it supports this.

However, Lynch has argued that Germans themselves would eventually seek to resume purchases of cheap Russian gas. He suggested that placing the pipeline under the control of a US legal entity would enhance Western oversight of Russian gas sales, removing the need for Europe to conduct direct business with Russian companies.

The NWT added that officials within the EU may be concerned that companies and politicians could be tempted again by low-cost Russian energy, particularly if hostilities in Ukraine end and Moscow pursues closer ties with Washington.

In late March, Russian Foreign Minister Sergei Lavrov said that Moscow and Washington were discussing the Nord Stream and various other joint energy projects.

Lynch had asked the US government in November 2024 to grant him a licence to participate in any auction of Nord Stream 2, should the pipeline be put up for sale.

Germany’s Federal Network Agency halted the certification process for Nord Stream 2 as an independent transmission system operator in November 2021, citing technical issues. On February 22, 2022, two days before Russia began its all-out invasion of Ukraine, former German Chancellor Olaf Scholz ordered the economy ministry to withdraw a previously issued energy security assessment and said that certification would be suspended following Russia’s recognition of the Donetsk and Luhansk People’s republics. As a result, the pipeline has never entered service.

Russian gas giant Gazprom is the sole shareholder of Nord Stream 2 AG. Its European financial backers include OMV, Wintershall Dea, Shell, Uniper and Engie, each of which had pledged to provide long-term financing of up to €950mn, or 50% of the project’s €9.5bn ($10.8bn) total cost.

In March 2022, Nord Stream 2 AG filed for bankruptcy after US sanctions were imposed. The bankruptcy procedure has since been repeatedly extended. The most recent extension was granted by a court in the Swiss canton of Zug, where the operator is registered, and expired on January 10 this year. In May, however, the Zug court approved a debt restructuring deal.

German import plans

Nord Stream 2 was never commissioned. US sanctions imposed during the first Trump administration led to repeated delays in its construction, and then when it was completed, Germany’s certification process dragged on, before Scholz halted it altogether in February 2022.

One of Nord Stream 2’s two strings was destroyed along with both strings of the Nord Stream 1 as a result of sabotage in September 2022. The remaining string has a capacity of 27.5bn cubic metres per year, equivalent to around a third of the gas demand of Germany, which is Europe’s biggest gas market. While Germany lost its Russian gas supply in 2022 as a result of the Yamal-Europe pipeline ceasing operations and the destruction of the Nord Stream 1 pipelines, the country has invested heavily in regasification capacity since then.  

Germany’s current regasification capacity stands at 37 bcm per year, with plans to expand this to close to 100 bcm by 2030, even though Germany’s network plan published last year projects that demand will fall to 52-61 bcm by 2030. Germany therefore aims to establish itself as a gas hub, importing LNG for resale to other European markets without a coast. Whether this plan will be implemented at all depends on overall European gas demand, which is projected by the European Commission to drop by a third from the level in 2024 to under 200 bcm.