The Greatest Energy Arbitrage of the Century
Why Nord Stream 2 is far more valuable than anyone wants to admit
Four weeks ago, reviving Nord Stream 2 seemed unthinkable. I predicted it would return as a bargaining chip in a future Ukraine-Russia peace deal. Now, the first cracks in the official narrative are showing. The Financial Times just confirmed that behind-the-scenes efforts to restart NS2 are already underway. According to their report:
A former spy and close friend of Vladimir Putin has been engineering a restart of Russia’s Nord Stream 2 gas pipeline to Europe with the backing of US investors, a once unthinkable move that shows the breadth of Donald Trump’s rapprochement with Moscow.
The efforts on a deal, according to several people aware of the discussions, were the brainchild of Matthias Warnig, an ex-Stasi officer in East Germany who until 2023 ran Nord Stream 2’s parent company for the Kremlin-controlled gas giant Gazprom.
Warnig’s plan involved outreach to the Trump team through US businessmen, the people said, as part of back-channel efforts to broker an end to the war in Ukraine while deepening economic ties between the US and Russia.
Even though Warnig denies any discussions with U.S. politicians or business representatives, the momentum behind these rumors suggests something bigger is unfolding.
In my earlier piece on NS2, I laid out why the project wasn’t dead. Now, as financial maneuvering heats up, it’s clear becoming clear this is an arbitrage play. That makes now the perfect moment to dive deeper into how this opportunity is being engineered behind the scenes. Because setting political barriers aside, the economic value is undeniable:
A series of explosions in September 2022 destroyed both pipelines of Nord Stream 1 and one of Nord Stream 2’s two pipelines. But the second NS2 pipeline remained intact.
With an annual capacity of 27.5 billion cubic meters of natural gas, this remaining pipeline alone could supply more than one-third of Germany’s total natural gas demand, which, according to the Statistical Review of World Energy, stood at 75.7 billion cubic meters in 2023.
Even repairing the damaged pipeline doesn’t seem out of the question. Prof. Michael Rodi from the University of Greifswald estimates the cost to be around €500 million—a fraction of the project’s original construction cost of almost €10 billion.
And it’s precisely the political barriers that make NS2 a unique opportunity. The current sanctions against Russia are setting off a chain reaction of unintended wealth transfers. Control over this strategic asset will shift in ways that would have been unthinkable before the invasion of Ukraine.
New winners and losers are emerging, many of whom were never part of the original equation. So who stands to gain, and who stands to lose? Let’s break it down.
Germany Calls It Dead, The Market Knows Better
The operating company behind NS2 is Nord Stream 2 AG, a Swiss-registered entity that is 100% owned by Gazprom. After Russia’s invasion of Ukraine, the company went into bankruptcy, and its assets, most notably, the two parallel pipelines running under the Baltic Sea, were frozen in legal limbo.
On January 9, 2025, a Swiss court in Zug, the jurisdiction where Nord Stream 2 AG is registered, ordered a halt to the insolvency proceedings until May 9, 2025.
This ruling came just weeks before the Financial Times report revealed that U.S. investors and Trump-linked figures were quietly working on a deal to restart NS2. The outgoing German government scrambled to dismiss the speculation:
“We took note of the highly speculative newspaper reports with surprise,” said a spokesman. “The federal government has no knowledge of any such negotiations.” Berlin also reiterated that Germany will not import Russian gas under any circumstances.
But government denials are one thing. The actions of the pipeline’s owners and potential investors tell a different story.
Gazprom Knows What NS2 Is Really Worth
The Swiss court’s decision to halt the insolvency proceedings until May 2025 wasn’t just a procedural delay. The ruling confirmed that serious financial and political maneuvering is happening behind closed doors, far from public scrutiny.
One of the most crucial details in the court’s decision was that Nord Stream 2 AG is actively in contact with an investor. The name was redacted from public filings, but the court acknowledged that this investor had submitted a letter emphasizing that the insolvency process must be avoided at all costs.
The court also confirmed that NS2 AG’s sole shareholder—whose name was also redacted but can only be Gazprom—wants to stop the insolvency proceedings. More than that, this shareholder has committed to paying off all small creditors in full. A rare move in bankruptcy cases, where creditors typically receive only a fraction of what they’re owed. This isn’t the behavior of an entity willing to let go of a stranded asset. It’s the behavior of a company desperate to retain control, no matter the cost.
By ruling in favor of Nord Stream 2 AG and its backers, the Swiss court has effectively frozen the bankruptcy process and given Gazprom and its unnamed investor more time to maneuver. That tells us something important: neither Gazprom nor potential buyers want Nord Stream 2 to go to auction.
And that leads to the real game at play here. Because avoiding an auction isn’t just about control. It’s about avoiding the truth.
No Bidding War, Please
In a typical insolvency the standard process is to auction assets off to the highest bidder. A competitive bidding process allows the market to reprice a distressed asset at its true value.
Governments and policymakers might declare an asset “worthless” for ideological reasons, but once it enters the open market, actual buyers determine its price based on supply, demand, and strategic importance. The moment investors start bidding, the truth comes out. If NS2 were to go up for sale, you’d see the market—not politicians—decide what it’s really worth.
And that’s exactly what Gazprom and Nord Stream 2 AG are determined to prevent.
If NS2 were truly a stranded, unsalvageable asset, Gazprom wouldn’t be fighting to stop an auction. It would let the bankruptcy process run its course. And it certainly wouldn’t be willing to pay off creditors to delay proceedings.
Why all the effort? Because an open sale would expose the pipeline’s real market value. That number might be far higher than anyone wants to admit.
Of course, an auction would also bring in new players. China, Gulf state investors, or other U.S.-backed energy firms could swoop in, offering to take over the asset.
To prevent all of this, Gazprom and NS2 AG stalled the process to cut a private deal instead. By delaying insolvency, they buy time to hand-pick a buyer who will keep them involved—most likely a U.S. consortium that can politically repackage the pipeline while still working with Gazprom behind the scenes.
In the meantime, keeping NS2 out of the public eye ensures that its real value remains hidden. No one gets to see what investors are actually willing to pay.
But in this game, one player stands out as truly clueless: the German government.
Germany Isn’t Killing NS2, It’s Just Handing It to Someone Else
By refusing to engage with the future of Nord Stream 2, Germany isn’t stopping the pipeline. It’s ensuring that someone else profits from it.
No amount of political rhetoric will erase the fact that one of the two NS2 pipelines remains functional and could, at any moment, become an active energy corridor.
Yet instead of securing control over the project, Germany is writing itself out of the story.
This is how nations lose leverage—not through force, but through inaction. If Berlin wanted to ensure that NS2 never came online, it could be negotiating an orderly dismantling of the pipeline or securing ownership stakes that would allow it to dictate the terms of any future deal. Instead, it’s walking away while others quietly step in.
The irony is that Germany has already sunk money into Nord Stream 2. State-owned energy company Uniper lent almost €1 billion to the project—money it has since written off entirely. Other major investors—ENGIE, OMV, Shell, and Wintershall—are now stuck holding worthless stakes as well. The moment Gazprom and a politically acceptable outside investor avert bankruptcy, their next move will likely be to buy out these companies for pennies on the dollar.
The arbitrage play here is a bet on time and political volatility. Those with deep pockets and patience to outlast the sanctions climate stand to make a fortune. Because despite Germany’s official stance that it no longer needs Russian gas, its actual energy policy tells a different story.
Tough Talk
Germany’s federally owned energy company SEFE imported 58 shipments of Russian liquefied natural gas (LNG) from Yamal LNG into the EU port of Dunkirk in 2024. That’s a 550% increase over the previous year. Some of this Russian LNG has made its way into Germany, directly contradicting government assurances that it has cut ties with Russian gas.
By some calculations, Russian LNG now accounts for as much as 9.2% of Germany’s total gas imports. In January, a coalition of ten EU member states called for the phasing out of Russian gas imports altogether, yet Germany refused to join them. Unsurprisingly, none of these countries (Denmark, Finland, Sweden, Latvia, Lithuania, Estonia, Poland, the Czech Republic, Romania, and Ireland) import Russian LNG themselves.
The German government can continue denying the economic reality, but markets aren’t fooled. The country remains deeply dependent on natural gas. For months, both the outgoing and incoming German governments have been debating plans to build between 20 and 50 new gas-fired power plants. The longer Berlin refuses to acknowledge the financial realities of Nord Stream 2, the more opportunistic investors will step in to fill the vacuum. And when the dust settles, Germany won’t be negotiating from a position of strength.
It will be a price taker, not a price setter.
Someone Always Wins
Sanctions don’t destroy assets. They just create massive arbitrage opportunities for those who know how to navigate them.
If NS2 follows the standard distressed asset playbook, the blueprint for turning it into a profitable energy corridor is already in place.
First, buy low. Right now, NS2 is sanctioned, politically toxic, and legally frozen, making it available at bargain pricing. Investors with the ability to wait out geopolitical turbulence can secure the asset for a fraction of its original value.
Next, rebrand. No one will call it “Nord Stream 2” anymore—that name is politically radioactive. Trump, known for his habit of renaming things to make them more marketable (think “Freedom Gas”), has already set the precedent for this strategy. Any potential investor—like Stephen Lynch, who recently applied for a Treasury license to acquire NS2-related assets—will likely take a page from that playbook.
Ownership will then be transferred to a neutral entity, stripping away the baggage of its Russian origins and making it politically acceptable under a new brand.
Finally, sell high. The moment an energy crisis hits or political pressure shifts, an intact, pre-built pipeline capable of supplying over a third of Germany’s gas needs becomes an indispensable asset. The new owners—whoever they are—will be in control.
If Germany’s backroom maneuvering isn’t sharper than its public posturing, it’s about to commit one of the biggest energy blunders in decades—second only to the self-inflicted disaster of shutting down nuclear plants. After all, its industrial base runs on raw inputs, not virtue signaling.
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You have great insight. I believe you are 100% on the mark here. The real puzzler is how Germany can be so clueless.
I'd try to buy it if I had the money!