Page 7 - NorthAmOil Week 21 2021

NorthAmOil COMMENTARY NorthAmOil

The Nord Stream
2 pipeline could
be completed by
September, Russian
officials have recently
said.

citing geopolitical reasons, financing deals were country’s Federal Maritime and Hydrographic
signed for the project in 2017. Originally, the Agency ruling on May 18 that a 2-km stretch of
partners wanted to form a consortium to build the pipeline in the German exclusive economic
and operate the pipeline, but doing so required zone could be laid.
approval from Polish regulators given Nord The pipeline could be completed by Septem-
Stream 2’s impact on Poland’s gas market. The ber, Russian officials have recently said.
regulators refused to grant this approval, how-
ever, and instead, Gazprom secured loans from Other obstacles
its partners to finance construction. Pipelaying Even with the US opting against further sanc-
operations then commenced in September tions against Nord Stream 2, the project still faces
2018. obstacles. For one, there are the current US sanc-
The Nord Stream 2 operating company, tions to consider. The measures target all com-
wholly owned by Gazprom, had to obtain per- panies involved in Nord Stream 2’s installation,
mits from Germany, Finland, Sweden, Russia certification and insurance. Around 20 entities,
and Denmark to build the pipeline in their mostly insurers, have reportedly left the project
waters. Getting approval from Denmark took in recent months, fearful of Washington’s wrath.
far longer than expected, however. The green In the interests of German relations, Biden Even with the US
light was finally given in October 2019, leaving will likely seek to lift these sanctions, in return
Russia not enough time to finish the pipeline by for some assurances that Russia will continue opting against
the end of that year as hoped. transiting its gas via Ukraine after the current further sanctions
The delay had a major impact, as the Trump contract expires at the end of 2024. This mat-
administration began imposing sanctions on ter is likely to be discussed at the upcoming against Nord
the project in December 2019, provoking a US-Russia summit, if it materialises. The meet-
backlash from Germany, which accused the US ing between Biden and Putin will most likely to Stream 2, the
of interfering with internal European affairs. To take place in June in Switzerland, Russia’s Kom-
an extent, the sanctions even strengthen Ber- mersant reported on May 18. project still faces
lin’s resolve, despite calls to withdraw support Another difficulty comes from EU regula- obstacles.
to Nord Stream 2 in light of the poisoning of tion. The EU introduced amendments to its gas
Russian dissident Alexei Navalny in August last directive in May 2019, requiring bloc rules on
year. unbundling and third-party access to be applied
The sanctions led Swiss contractor Allseas to to pipelines to and from third countries. The
suspend pipelaying activities in December 2019, amendments allowed for national regulators to
leaving just 6% of the pipeline left to complete. grant exemptions, but Germany’s energy and
Russia then had to dispatch its own pipelaying infrastructure watchdog Bundesnetzagentur
vessels to finish the job. decided against this in May 2020. This has raised
Work on Nord Stream 2 did not resume until the prospect that Gazprom might have to divest
December last year, in waters off Denmark. the pipeline, or offer up its capacity to other gas
Work is also underway off Germany, with the companies in Russia.™

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