RUSSIA'S SHIP FOR NORD STREAM 2

PLATTS - 11 May 2020 - A Russian pipelaying vessel expected to complete the controversial Nord Stream 2 gas pipeline from Russia to Germany is now outside the German port of Mukran in northeast Germany, S&P Global Platts trade flow software cFlow showed Monday.

The move by the Akademik Cherskiy to the port on the German island of Rugen could be significant given that Nord Stream 2 pipe is stored there.

The vessel has been widely billed as a replacement for the Allseas vessels that laid most of the 55 Bcm/year line before US sanctions in December last year forced the Swiss company to halt work.

Just 160 km (99 miles) of Nord Stream 2 is left to lay in Danish waters out of the total 2,460 km length.

Asked about the latest developments Monday, a spokesman for the Nord Stream 2 operating company declined to comment, confirming only the location of the Nord Stream 2 pipes. "Pipes are stored in Mukran," he said.

The Akademik Cherskiy -- which has the dynamic positioning capabilities requested by the Danish license to operate -- has been at sea for the best part of three months and arrived outside the Russian port of Kaliningrad on May 2, according to cFlow.

It spent five days stationary -- seemingly not entering the port itself according to cFlow -- before leaving to Mukran.

It had been thought that some upgrade work could have been carried out on the vessel at Kaliningrad before pipelaying work could begin.

The vessel remains in waters outside Mukran Monday, flanked by a dredger called the Boka Constructor.

The Nord Stream 2 operating company has declined to give any guidance on the schedule for completing the pipeline, saying only that it was "actively looking for solutions" to finish the pipelaying work.

It said it would not comment on any technical, commercial or schedule detail "in the light of the ongoing threat of sanctions."

Russia had planned to bring Nord Stream 2 online by the end of 2019, but first permitting issues in Denmark and then the US sanctions meant the project was delayed.

Russian President Vladimir Putin has said the pipeline should become operational by the first quarter of 2021 at the latest and that Russia has the capability to complete the pipeline without international assistance.

EU derogation

The project received another blow in early May, however, when the German energy regulator Bundesnetzagentur reportedly said it planned to reject a request from the Nord Stream 2 operating company for a derogation from the EU's amended gas directive rules that came into effect in May 2019.

Such a derogation would allow the pipeline to be exempted from third-party access and unbundling rules, and requirements on transparent tariffs.

However, BNetzA reportedly said in its preliminary conclusion to the relevant parties that it planned to reject the application on the grounds that the pipeline was not completed before the directive came into effect.

A consultation period for comments on the preliminary decision ended May 8 and the regulator has said it plans to make its final ruling "in a timely manner."

The Nord Stream 2 spokesman said Monday that even if no derogation was awarded, it would not impact on construction of the pipeline.

"It is important to note that the construction permits are based on a different set of legal rules than the EU rules for the operation of the pipeline (Gas Directive)," he said.

"Therefore, the procedures concerning the Gas Directive have no impact on the finalization of construction works," he said.

Legal challenges

Nord Stream 2 also continues to look to have the amendments in the gas directive canceled.

It began arbitration proceedings in September in a bid to force the EU to annul changes to the directive, having already asked the EU's General Court in July last year to annul what it called "discriminatory" changes.

"The ongoing procedures serve the purpose of clarifying the applicable rules for the operation of Nord Stream 2," the spokesman said.

"The need for clarification has been caused by the enactment of an unlawfully discriminating amendment to the EU Gas Directive, and by the absence of an impact assessment which the European Commission is normally obliged to provide for any new legislation," he said.

Arbitration cases such as that launched by Nord Stream 2 have an average duration of 2-4 years, while Nord Stream 2's separate appeal to the EU's General Court was expected to take 20 months to reach its conclusion.

The Nord Stream 2 spokesman said the operation of Nord Stream 2 would comply "with all applicable legal requirements."

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Earlier:

2020, March, 25, 13:25:00 NORD STREAM 2 HIT FOR POLAND Significant volumes of Russian gas currently are transited to Germany via Poland, which are a key revenue generator for the country. English

2020, March, 6, 12:20:00 NORD STREAM 2 EXTENSION Construction works on the 55 Bcm/year Russian Nord Stream 2 pipeline linking Russia to Germany via the Baltic Sea were abruptly interrupted in late December after the US government implemented new sanctions threatening measures against contractors building the project. English

2020, February, 19, 11:40:00 U.S. ANNOYED: NORD STREAM 2 While Gazprom has said it’s looking at options to complete the pipeline, it hasn’t given any details on where it will find the ship to do the work. One of the pipeline’s financial backers, Austrian gas and oil company OMV AG, has predicted that the Russians will follow through. English