Monday, July 15, 2024

Gazprom to restart construction of Nord Stream 2

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Russia will restart construction of its Nord Stream 2 pipeline to Germany this week in the face of US sanctions which have suspended construction for more than a year.

Kremlin-controlled gas group Gazprom will begin laying pipelines in a Danish-administered section of the Baltic Sea on Friday, despite Washington’s measures to cripple the project that divides politically funded by five of Europe’s largest energy companies.

The United States, backed by Poland and other eastern EU states, says the pipeline is a political project designed to increase Europe’s dependence on Moscow and bypass already existing pipelines across Ukraine. Russia and Germany say it’s a purely commercial initiative to meet the future higher gas demand in Europe.

The € 9.5 billion pipeline has long been one of Europe’s most controversial geopolitical issues and an indicator of relations between Moscow and EU states.

But the Donald Trump administration’s decision to impose sanctions on the pipeline, while encouraging exports of its own gas to Europe, has sparked intense debate over Europe’s right to choose its own supplies. in energy and broader trade relations with the United States.

These sanctions delayed the pipeline beyond its original scheduled opening date of mid-2020 and forced Gazprom to adjust its approach to account for the loss of foreign contractors, while Washington pledged to continue to impose the restrictions necessary to block its completion or use.

“US sanctions will delay the launch of the project but will not prevent its completion. Ultimately, Moscow, with the help of Berlin, will find ways to circumvent the sanctions, ”said Naz Masraff, director for Europe at Eurasia Group, a risk consultancy firm.

Work on the 1,230 km-long pipeline was abruptly halted in December 2019 when Swiss pipe-laying company Allseas scrapped the project to avoid US sanctions aimed at punishing companies helping with construction, 94% of the length being completed. This forced Gazprom to find and prepare its own ships to lay the remaining 120 km on the seabed.

Denmark’s energy agency said in a statement that it had received the necessary documents to approve the resumption of pipeline laying on January 15. Gazprom will use the Fortuna vessel for the pipe layer and two support vessels, capable of laying approximately 1 km of pipes per day. . This could see it complete construction in about four months, depending on weather conditions.

The new U.S. sanctions adopted this month also apply to companies that insure and certify pipeline-laying operations, further complicating Gazprom’s efforts. DNV GL, a Norwegian risk assessment company, has already said it has ceased all inspection activities related to the pipeline and would not be able to certify its completion.

Nord Stream 2 said in a statement it was “unable to comment on the potential impacts” of future US sanctions. Russian President Vladimir Putin has promised that the pipeline will be completed regardless of opposition from Washington.

The pipeline runs alongside the already operational Nord Stream 1 and will add an additional 55 billion cubic meters of gas per year.

While the pipeline is 100% owned by Gazprom, half of its cost has been supplied by five European companies: Shell, Uniper, OMV, Wintershall and Engie. He was also strongly supported by Berlin.

An official from the German Foreign Ministry told the Financial Times: “Nord Stream 2 is a commercial project managed by a consortium of private companies. . . According to our information, the construction permits necessary for the laying of the pipeline have been issued.

Ms Masraff said US President-elect Joe Biden would likely be more open to compromise given his desire to rebuild relations with Europe that suffered under Mr Trump.

“Biden will be much more sensitive than Trump to European and especially German sensitivity around Nord Stream 2 in the context of strengthening transatlantic ties,” she said. “The sanctions will likely be used as leverage to cooperate with the German government on restrictions to make the pipeline operational while paying attention to Washington’s concerns about Ukraine.”

Additional reporting by Richard Milne in Oslo and Katrina Manson in Washington


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