NORD STREAM 2 UNSCHEDULED

PLATTS - 21 Oct 2020 - The developer of the almost complete Nord Stream 2 gas pipeline from Russia to Germany remains tight-lipped on its plans for finishing the 55 Bcm/year line following a move by the US to broaden its sanctions threat against the project.

The US State Department on Oct. 20 widened the scope of sanctions against the pipeline and warned companies involved in the final installation that they face sanctions if they do not wind down activities.

A little over 150 km of Nord Stream 2 remains to be laid in Danish and German waters after an initial threat of US sanctions last December forced principal pipe-layer Allseas to halt work.

"We are aware of the new guidance issued by the US State Department," a spokesman for Nord Stream 2 said Oct. 21.

He said the company would not comment on any possible impacts of the new guidance on companies supporting the project, but did note that any sanctions threats targeted at Nord Stream 2 affected "a large group of Western contractors and investors".

"If imposed, they could directly hit more than 120 companies from more than 12 European countries," he said.

Asked when it planned to resume pipelaying work, the spokesman said the company would announce its plans in due course.

The new guidance expands on the State Department's interpretation of Congress's Protecting Europe's Energy Security Act of 2019, which targets vessels laying pipe at least 100 feet below sea level for Nord Stream 2, TurkStream, or any successor project.

It said companies providing "facilities for upgrades or installation of equipment for those vessels" or funding for such work also faced potential sanctions.

The new guidance is seen as targeting any entities helping to upgrade the Akademik Cherskiy, considered the vessel most likely to complete the pipelaying work.

The Akademik Cherskiy, anchored in the Baltic Sea off the coast of Kaliningrad, moved from the German port of Mukran -- where it had been for almost five months -- on Oct. 1, according to Platts cFlow, trade flow software.

Mukran is home to the remaining pipe needed to complete the project.

Ukraine reaction

The US move was welcomed by Ukraine's state-owned gas company Naftogaz Ukrayiny, which has been a vocal critic of the project since its conception.

"Naftogaz supports the US's decision to increase sanctions against Nord Stream 2," it said in a statement.

It said that the new guidance meant the US would impose sanctions on all companies that provide services or enhance the capabilities of the Akademik Cherskiy or any other Russian pipelayer being used to build Nord Stream 2.

"Naftogaz will continue to work closely with its partners in Washington, Brussels, Berlin and other regions to prevent the completion of Nord Stream 2," it said.

Naftogaz CEO Andriy Kobolev said in early March he hoped the US government would help to kill off the project permanently.

"[The sanctions on] Nord Stream 2 was one of the major steps that was taken and we hope the US government will continue in the same direction," Kobolev said then.

"The game is not over yet. The Russians will try to create their own technical capacity to finish the pipeline. We are currently discussing -- also here -- to see how to make sure that that project is actually dead," he said.

Nord Stream 2 -- which has been criticized by the US, the European Commission, Ukraine and other countries in Eastern Europe for focusing too much European gas import capacity on one route and one source --- would double the Russia-Germany subsea gas export corridor to 110 Bcm/year if completed.

However, supporters of the project -- including five Western European energy companies that have also helped finance the project (Engie, OMV, Shell, Uniper and Wintershall Dea) -- say the earliest possible commissioning of the pipeline is in the interest of Europe's energy security, European consumers, EU economic competitiveness, and climate protection commitments.

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