Pipes for the Nord Stream 2 Baltic Sea pipeline are stored on a site at the port of Mukran in Sassnitz, Germany. Picture: REUTERS/HANNIBAL HANSCHKE
Pipes for the Nord Stream 2 Baltic Sea pipeline are stored on a site at the port of Mukran in Sassnitz, Germany. Picture: REUTERS/HANNIBAL HANSCHKE

Frankfurt — Russia is stepping up work on the Nord Stream 2 pipeline before the US tightens sanctions against the controversial project designed to feed more natural gas into Germany.

Construction of the 1,230km pipeline reached a milestone on Monday with the near-completion of pipe-laying in Germany’s exclusive economic zone, the project operator said. Among the next steps are resuming work in Denmark’s part of the Baltic Sea, where the bulk of the remaining sections of the 157km link will be located.

About 120km in Danish waters and 30km in Germany’s exclusive economic zone are still to be laid, Nord Stream 2 said in an e-mailed reply to questions on Tuesday.

Progress on the link is a victory for Russian President Vladimir Putin and the nation’s gas exporter, Gazprom. When complete, the project will allow Russia to expand deliveries of gas to Europe and circumvent the traditional transport corridor through Ukraine.

The US and East European nations say Nord Stream 2 will make Germany and the EU too reliant on Russian gas.

Work on the €9.5bn project was stopped a year ago by US sanctions and resumed only earlier this month when Gazprom found its own ship to lay the pipeline. Nord Stream 2 can use the vessel Fortuna to carry out the work starting January 15, assisted by construction vessels and other supply ships, the Danish Maritime Authority said last week.

Based on the Danish permit, the operator must submit an updated schedule to the nation’s energy agency before carrying out the works. So far, the regulator has not received the updated plan, the agency said. The Fortuna vessel can lay as much as one kilometre of pipeline a day. At that rate, analysts estimate Nord Stream 2 could start operations as soon as the end of 2021.

The US is manoeuvring to tighten sanctions, extending penalties to companies that provide technical certification and insurance for the work. That legislation was part of a broader defence bill that passed congress but was vetoed by President Donald Trump.

The House of Representatives voted to override the veto. If that is endorsed by the Senate the new measures could come into force in the next few weeks.

Should the Senate override Trump’s veto on the defence bill, “the new sanctions against Nord Stream 2 will turn into reality”, said Mateusz Kubiak, a senior analyst at Warsaw-based energy consultant Esperis.

“It might be just an another factor that will make it more difficult for the Russians to effectively and timely restart works” in the Danish waters in January, Kubiak said. “All of the additional pipe-laying activities will now be sanctioned, including surveying, trenching and rock placement.” 

The US maintains that Nord Stream 2 gives Russia too much leverage over Europe and that American liquefied natural gas supplies are a better option. Nord Stream 2 benefits the economies of Germany and Europe since the price of Russian pipeline gas is 20% lower than that of US liquefied natural gas, according to Putin.

US sanctions can complicate the completion of Nord Stream 2, Kremlin spokesperson Dmitry Peskov said last week. Deputy prime minister Alexander Novak told the state TV channel Rossiya 24 on Monday that the pipeline will be completed because it is good for European business.

“It’s a commercial project, which is, in the first place, in the interests of our foreign partners,” Novak said

Bloomberg

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