Page 12 - NorthAmOil Week 05 2021

NorthAmOil POLICY NorthAmOil

US open to easing Nord Stream 2 sanctions

US-GERMANY THE US may be prepared to enter talks with regardless of how much it actually sends. Once
Germany on easing its sanctions on Nord Stream this contract expires, though, Gazprom will be
2, German business paper Handelsblatt has said, free to divert all flows to Nord Stream 2 if it is
signalling that the Biden administration may ready.
have resigned itself to the fact that the Russian Klaus Ernst, the head of Germany’s Bundestag
pipeline will be completed. Committee on Economic Affairs and Energy,
Washington has been an ardent opponent of has already responded to the report by ruling out
Nord Stream 2, causing clashes with Germany any mechanism that would allow the US to shut
and its other European allies that are anticipating down the pipeline at will.
economic gains from the project. However, the
new US administration has signalled it could be What next?
willing to discuss lifting its sanctions, Handels- Gazprom has warned investors that there is a
blatt reported, citing a US official involved in the risk that Nord Stream 2 could be “suspended or
talks. The report comes after US Press Secretary entirely discontinued due to extraordinary cir-
Jen Psaki said in late January that the Biden cumstances, including local pressure.”
administration would review sanctions imposed Besides US pressure, the pipeline is opposed
by its predecessor. by a number of Eastern European countries.
Work on Nord Stream 2 ground to a halt in France, the EU’s second most influential mem-
December 2019, after the US imposed its first ber, has also urged Germany to rethink its sup-
sanctions on the project, initially targeting only port in light of the Navalny case.
the owners of pipe-layers. Russia responded by “We have already said we have the greatest
deploying its own pipe-laying vessels, which doubts on this project in this context,” European
began work in German waters towards the end Affairs Minister Clement Beaune told France
of last year. Inter radio on February 1. Asked if France
Washington was expected to expand its sanc- wanted Berlin to withdraw its backing, he said:
tions regime in the near future, following the “Indeed, we have already said this.”
passing of a bill by both houses of US Congress. More sanctions were a possible option, he said,
These new measures will also target those pro- while acknowledging that “it’s a decision for Ger-
viding technical certification and insurance, many, because the pipeline is in Germany.”
as well as other construction activities such as Still, the consensus among analysts is that the
surveying, trenching and rock replacement. The 55 bcm per year pipeline will reach completion,
threat has led to a number of companies pulling albeit after some time.
out of the project, including German engineer- “Our position has long been that Nord Stream
ing firm Bilfinger, Swiss insurer Zurich Insur- 2 was likely to be finished in one to two years
ance and Norwegian classification society DNV regardless of US efforts, and that ramp-up to
GL. full capacity afterwards would likely take several
Only less than 5% of the pipeline is left to years,” BCS Global Markets said in a research
complete, though, and Germany’s support for note. “This news only tends to confirm our view,
the project has not wavered, despite intensified and is positive for Gazprom sentiment.”
Dmitry Medvedev, Deputy Chairman of
Biden is likely US pressure and international outrage over Mos- Russia’s Security Council, said on February 1
cow’s treatment of opposition leader Alexei Nav-
to prioritise alny and his supporters. The US may therefore that Moscow was still confident that the pipe-
improving ties have conceded that its efforts have failed. line would be finished, despite US interference.
While former US President Donald Trump But he warned that Russia would consider legal
with US allies avoided criticism of Russia, he expressed strong action against attempts to thwart the project.
Whether or not Nord Stream 2 flows gas will
opposition to Nord Stream 2. Rather than citing
over protecting political considerations, Trump did not disguise ultimately be decided by Germany, which has
the fact his chief concern was the competition repeatedly defended the project as commercial
the country’s that the Russian pipeline posed to US LNG. rather than political in nature. It has even taken
His successor Joe Biden has also said Nord steps to shield the pipeline from tougher US
share of the Stream 2 is “a bad idea” for Europe. But Biden is sanctions. However, all eyes are on whether Ber-
global gas likely to prioritise improving ties with US allies lin’s resolve will weaken in the face of the mass
over protecting the country’s share of the global detention of protesters across Russia.
market. gas market, given his green agenda. Navalny returned to Moscow on January 17
Before easing its sanctions, though, the US from Berlin, where he was being treated for poi-
wants certain things in return, according to soning from a Novichok nerve agent, which he
Handelsblatt. It is reportedly seeking a guaran- says was carried out by Russian security services.
tee that Russian gas flows via Ukraine will be Tens of thousands took to the streets of Russia’s
maintained, and that the US has a mechanism largest cities on January 23, followed by similarly
for switching off Nord Stream 2 if Ukrainian sup- sized protests on January 31. Further protests
plies falter. Under a contract running until the erupted after a Moscow court on February 2 sen-
end of 2024, Russia has to pay fees covering 40bn tenced Navalny to two years and eight months in
cubic metres per year of gas transit via Ukraine, a prison colony.™

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