RUS | ENG | All
Enter the email or login, that you used for registration.
If you do not remember your password, simply leave this field blank and you will receive a new, along with a link to activate.

Not registered yet?
Welcome!

2021-12-02 12:15:00

NORD STREAM 2 SANCTIONS ANEW

NORD STREAM 2 SANCTIONS ANEW

REUTERS - Dec 1 - A simmering threat of sanctions against the operator of the $11 billion Nord Stream 2 pipeline risks shutting off cover from European insurers for the politically-sensitive project to bring Russian gas directly to Germany. 

Kremlin-backed energy giant Gazprom (GAZP.MM) leads the consortium which, despite stiff opposition from the U.S. and some European nations, has built the pipeline under the Baltic Sea - bypassing Ukraine amid a geopolitical battle for influence in the region.

The U.S. stepped up sanctions on companies linked with the project last week, while Germany's energy regulator this month temporarily halted its certification process. It said the Swiss consortium behind the pipeline had to form a German unit to show it has enough funding and independence from Gazprom. 

"I don't think any insurers will touch this project with a barge pole until the situation becomes more settled," said Leigh Hansson, a partner at law firm Reed Smith.

The U.S. and some European opponents of Nord Stream 2 say it will make Europe too reliant on Russian gas, allowing Moscow to expand its political, economic and military influence. But other governments say it is vital to secure energy supplies, as gas prices surge and the threat of power outages looms.

Worries over fresh sanctions led top European insurers AXA (AXAF.PA) and Zurich (ZURN.S) and reinsurer Munich Re (MUVGn.DE) to pull out of insuring the construction this year. Without cover, the pipeline operator could also be exposed to costs for damage, delays or litigation and find it harder to secure loans. 

The Biden administration earlier this year waived sanctions on the pipeline's operating company, which theoretically enables non-U.S. companies to provide financing and insurance, while Germany has agreed to take action if Russia uses energy as a weapon in its relations with Ukraine.

But lawyers and political risk analysts say the chances of sanctions being imposed has been heightened as a build-up of troops on Ukrainian borders fuels fears of a Russian invasion. 

Moscow has dismissed talk of a new Russian assault as inflammatory, but NATO and the U.S. on Tuesday warned Russia it would pay a "high price" for military aggression. 

A spokesperson for Nord Stream 2's Swiss-based operating company said "all construction, operation and other activities of our company are covered by appropriate insurances". The company did not comment on its contractual partners.

Gazprom declined to comment on Nord Stream's insurance.

In the absence of European insurers, the project could use Russian entities, lawyers say. One Russian insurer Konstanta - now renamed RNCB Insurance - has already been sanctioned.

RNCB Insurance did not immediately respond to request for comment.

SANCTION THREAT

European insurers, such as those operating in the Lloyd's of London insurance market, could in theory underwrite the pipeline, its Chief Executive John Neal said.

"We've been involved with the Nord Stream project previously, certainly insuring its construction," Neal said, adding: "We need to be hugely respectful of sanctions."

Lloyd's of London declined to comment further.

Munich Re CEO Joachim Wenning told Reuters it is not currently involved with Nord Stream 2 due to sanctions issues.

Zurich said it did not comment on potential or existing customer relationships but stressed that it placed high priority on sanctions compliance. AXA declined to comment.

Allianz, Europe's biggest insurer, said it could not comment on client relationships, but a spokesperson said the German firm followed "all sanctions regimes very thoroughly".

PIPELINE COVER

With construction complete, insurance for the pipeline itself would protect against problems such as property damage, business interruption and directors' and officers' liability.

But the delayed approval will likely slow arrangements, said Ross Denton, head of international trade at law firm Ashurst.

One key risk is that the United States could extend sanctions to European firms at short notice, experts say.

Nigel Kushner, chief executive of London law firm W Legal, says the U.S. has a reputation for using sanctions against tactics that aggravate NATO and the West.

"The reaction of the U.S. on almost every single occasion is to ramp up sanctions," he says.

"Who in their right minds will jump into something and finance something and provide support to something, because there is a risk they may be sanctioned?

"Insurers are prudent and I think they will be reticent." 

-----


Earlier:

NORD STREAM 2 SANCTIONS ANEW
2021, November, 25, 15:50:00
NORD STREAM 2 WITHOUT UKRAINE
The current transit agreement between Russia and Ukraine is due to expire at the end of 2024. It came into effect at the start of 2020, and was brokered by the European Commission.
NORD STREAM 2 SANCTIONS ANEW
2021, November, 17, 13:20:00
NORD STREAM 2 CERTIFICATION SUSPENDED
The regulator said a new subsidiary of Nord Stream 2 AG announced by the operator would need to submit a new application for certification.
NORD STREAM 2 SANCTIONS ANEW
2021, November, 16, 14:45:00
NORD STREAM 2 CERTIFICATION ANEW
Russia has said that Nord Stream 2 is ready to begin commercial operations pending regulatory approval and that gas flows through the pipeline would help ease the current high European gas prices, which remain at sustained highs on winter supply concerns.
NORD STREAM 2 SANCTIONS ANEW
2021, October, 18, 12:30:00
NORD STREAM 2 WILL HELP
Russia has repeatedly said that the early launch of Nord Stream 2 would help ease the current high gas prices in Europe, which have soared in recent weeks on intensifying concerns over winter gas supply amid lower-than-expected Russian deliveries.
NORD STREAM 2 SANCTIONS ANEW
2021, September, 24, 11:05:00
NORD STREAM 2 CERTIFICATION
PGNiG and the Polish government have long been opposed to Nord Stream 2, saying it threatens European energy security and could see Poland's role as a transit country for Russian gas to Europe reduced.
NORD STREAM 2 SANCTIONS ANEW
2021, September, 10, 12:50:00
NORD STREAM 2 COMPLETED
On Sept. 6, Gazprom said that pipelaying work on the project had been completed and commercial operations are expected to begin before the end of 2021. Nord Stream 2 includes two strings of 27.5 Bcm.
All Publications »
Tags: NORD, STREAM, SANCTIONS, RUSSIA, GAZPROM
Chronicle:
NORD STREAM 2 SANCTIONS ANEW
2022, January, 26, 12:19:00
TRANSPORTATION OIL AND GAS CONGRESS, 21th-22th of February, 2022
Business and Technical Views On The Market At The Transportation Oil and Gas Congress 2022
NORD STREAM 2 SANCTIONS ANEW
2022, January, 26, 12:18:00
ГИДРОЭНЕРГЕТИКА ЦЕНТРАЛЬНАЯ АЗИЯ И КАСПИЙ 2022
Инвестиционные проекты строительства и модернизации будут представлены на международном конгрессе и выставке «Гидроэнергетика Центральная Азия и Каспий 2022»
NORD STREAM 2 SANCTIONS ANEW
2022, January, 26, 12:15:00
HYDROPOWER FOR ECUADOR 2.4 GW $6.7 BLN
The Santiago project would comprise eight power generation units, with 304.10 MW Francis-type turbines and would require US$3bn of private investments for a total budget of US$6.7bn.
NORD STREAM 2 SANCTIONS ANEW
2022, January, 25, 13:10:00
OIL PRICE: NOT ABOVE $88
Brent rose 61 cents, or 0.7%, to $86.88 a barrel, WTI climbed 44 cents, or 0.5%, to $83.75 a barrel.
NORD STREAM 2 SANCTIONS ANEW
2022, January, 25, 13:05:00
RUSSIAN SMR NUCLEAR
Small Modular Reactors Day was an international platform for discussing the benefits of Small Modular Reactors, the prospects for their development and how this technology can be applied around the world.
NORD STREAM 2 SANCTIONS ANEW
2022, January, 25, 13:00:00
U.S. NUCLEAR FOR POLAND
The MoUs - signed in both Gdańsk and Westinghouse's office in Warsaw - include cooperation on the possible construction of six AP1000 plants for the Polish nuclear power plant programme.
NORD STREAM 2 SANCTIONS ANEW
2022, January, 25, 12:55:00
SPAIN ENERGY PRICES UP
Energy costs drove most of the increase, with a 95.9% jump in December from a year earlier,
All Publications »