Page 6 - EurOil Week 02 2021

EurOil COMMENTARY EurOil

German state creates foundation

to circumvent US sanctions on

Nord Stream 2

Creating a state-backed foundation will make it harder for the US to thwart

Nord Stream 2 by taking steps such as freezing funds

GERMANY GERMANY’S northern state of Mecklen- surveying, trenching and rock placement.
burg-Vorpommern aims to establish a founda- The legislation was part of a broader defence
WHAT: tion to support the completion of Russia’s Nord bill that cleared US Congress but was vetoed by
Germany’s Mecklenburg- Stream 2 gas pipeline, amid the looming threat of US President Donald Trump. The House of Rep-
Vorpommern state has further US sanctions against the project. resentatives then voted to override that veto and
provided creating a fund The state’s parliament gave the green light the Senate followed suit on January 1, meaning
to buy materials for Nord on January 7 to the initiative, which would set the sanctions could come into law in the next few
Stream 2’s construction. up a foundation that could buy needed materi- weeks.
als for pipeline construction, thereby circum- The US maintains that Nord Stream 2 will
WHY: venting Washington’s sanctions. Lawmakers give Russia too much leverage over Europe,
This will make it harder approved €200,000 ($245,000) of public money and has promoted US LNG as a better alter-
for the US to prevent the for the fund, while the Gazprom-owned Nord native. But the pipeline enjoys strong support
project’s completion. Stream 2 operating company has pledged a fur- from the current German government, led by
ther €20mn. The foundation will be headed by German Chancellor Angela Merkel’s conserv-
WHAT NEXT: ex-state premier Erwin Sellering, former Euro- ative Christian Democratic Union (CDU).
Another round of US pean Parliament member Werner Kuhn and an And that support has only solidified because
sanctions on the Russian entrepreneur called Katja Enderlein. of US actions. Yet the pipeline is still divisive in
pipeline is expected in “We believe that it is right to build the pipe- Germany, with opposition politicians warning
weeks. line,” State Premier Manuela Schwesig told it will lock the country into fossil fuel depend-
reporters. ence for longer.
Germany stands to make significant eco- Creating a state-backed foundation will make
nomic gains from Nord Stream 2’s completion, it harder for the US to thwart Nord Stream 2 by
in terms of lower gas prices, transit revenues and taking steps such as freezing funds, as the foun-
increased energy security. At peak capacity the dation will have no commercial activities beyond
pipeline will flow up to 55bn cubic metres per the pipeline.
year of Siberian gas to northern Germany. For its part, Russia says it is confident that
Construction ground to a halt in December additional US sanctions will be too little too
2019 after Swiss contractor Allseas was forced to late. Russian Deputy Prime Minister Alexan-
withdraw when the US slapped sanctions on the der Novak told state Russian television in late
project, leaving just 6% of its offshore section left December that the pipeline would be finished
to complete. Work resumed in German waters because it is in Europe’s commercial interests.
last month and is due to re-commence in Danish “It’s a commercial project, which is, in the first
waters on January 15, with Russia using its own place, in the interests of our foreign partners,” he
pipelaying vessels. said.
Washington’s current sanctions only target Still, companies are taking the sanctions
those companies providing pipelaying vessels threat seriously. Norway-based quality assur-
for Nord Stream 2. But a proposed second round ance firm DNV GL said in early January it would
will extend penalties to those providing techni- no longer provide pipeline integrity verification
cal certification and insurance for the work, as services for Nord Stream 2 because of Washing-
well as additional pipelaying activities such as ton’s punitive measures. ™

P6 www. NEWSBASE .com Week 02 14•January•2021