Construction On Nord Stream 2 Resumes As It Races Against Further U.S. Sanctions

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Construction On Nord Stream 2 Resumes As It Races Against Further U.S. Sanctions

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On December 11th, work on the pipelaying of the final stretch of the Nord Stream 2 reportedly resumed, despite the threat of US sanctions.

Germany’s Authority of Waterways and Shipping Management published a notice to seafarers on the resumption of building works on the final few kilometres of the pipeline.

It warned them to avoid the area up to “around Dec. 31,” and pointed out that “anchoring or fishing is not permitted in the area of the planned pipelines.”

Confirming the resumption of construction, Nord Stream 2 said in a statement that “the pipelay vessel Fortuna will lay a 2.6-kilometer (1.6 mile) section of the pipeline in the German Exclusive Economic Zone in water depths of less than 30 meters (100 feet).”

The less than 30 meters part of the statement is important, since US sanctions target companies that lay pipes deeper than that.

Besides Russian company Gazprom, which has a majority stake in the project, the international consortium involved in the pipeline includes European players such as Germany’s Wintershall and Uniper groups, the Dutch-British giant Shell, France’s Engie and Austria’s OMV.

 

The strongest voice against the Nord Stream 2, as usual is that of the US.

“Now is the time for Germany and the EU to impose a moratorium on the construction of the pipeline,” the acting US ambassador to Germany, Robin Quinville, told German daily Handelsblatt on December 5th.

Quinville said it would send a clear signal that Europe would no longer accept Russia’s “malicious” behavior.

In response, Russia’s foreign ministry spokeswoman Maria Zakharova denounced US political “aggression”.

Zakharova said the US had repeatedly interfered in Russian energy pipeline projects over the past decades, “wherever and whenever they go and regardless of which treaties legitimize them”.

US President-elect hasn’t made a recent statement on the Nord Stream 2, however he made one back in 2016.

He said that Nord Stream 2 was a “fundamentally bad deal” for Europe, with his election campaign confirming that he would continue to oppose the project.

Nord Stream 2 remains unfinished, with a little over 150 km left to lay in German and Danish waters.

According to a notice to sea-farers published by the German Waterways and Shipping Authority Stralsund, a 2.6 km stretch of pipe will be laid for both strings of Nord Stream 2 in German waters in the period between December 5th and 31st.

Vessels that could potentially carry out the work — the Akademik Cherskiy and the Fortuna — are both on standby in the Baltic Sea.

Asked for comment December 7th, Nord Stream 2 told S&P Global Platts it was “not in a position to deliver any information about construction details and planning”.

Currently, the project is already sanctioned. US measures introduced as part of the expanded Protecting Europe’s Energy Security Act (PEESA) statute in October target companies involved in pipe-laying at depths of 100 feet or more below sea level.

In the meantime, measures included in the US 2021 National Defense Authorization Act (NDAA) look to further pressure the Nord Stream 2.

US House and Senate committees reached agreement on the final version of the bill last week and is expected to be voted on this week. It will then need to be signed off by US President Donald Trump.

The NDAA calls for sanctions on companies that knowingly provide underwriting services or insurance or reinsurance for vessels engaged in the construction of Nord Stream 2, as well as those providing services for upgrades to vessels and for inspection and certification activities.

The next round of sanctions are aimed at preventing companies that access the U.S. financial system from writing insurance and certification for the pipeline.

That would hit the primary insurer Zurich Insurance Group AG, and Det Norske Veritas Holding AS, the Norwegian company verifying the pipeline’s safety and integrity.

“We have both the program to implement the project, as well as specific steps that should be taken, that will be taken in order to implement this project,” Russian Foreign Ministry’s spokeswoman Maria Zakharova told reporters December 10th. “We are also well aware that the United States of America won’t stop trying to prevent Russia from implementing not only this project, but also its foreign policy and international activities in general.

Germany is looking at other ways to protect its section of the project by looking at a legal mechanism that would help protect from the U.S. sanctions.

Germany must prepare for a “hard confrontation” to defend its interests in the project that will increase gas supplies from Russia, said Rolf Muetzenich, the co-ruling Social Democrats chief whip in parliament. He backs a proposal by the provincial government of Mecklenburg-West Pomerania and the place where Nord Stream 2 lands to create new legal protections.

The government of Mecklenburg-West Pomerania needs to move “urgently” toward legal protections that ward off pending U.S. sanctions, according to the document.

Currently, it appears to be a race to complete the project before the sanctions move into action in 2021, and likely before Joe Biden enters the White House, as he is also expected to have a policy against the project.

Besides the United States, European nations like Poland, Ukraine and the Baltic states are also opposed to the pipeline, claiming it will increase Europe’s reliance on Russian energy supplies, which Moscow could then use to exert political pressure.

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