Page 5 - FSUOGM Week 21 2021

FSUOGM COMMENTARY FSUOGM

Then US Vice President
Joe Biden and then
Russian PM Vladimir
Putin meet in 2011.
US-Russian ties have
altered considerably
since then.

transiting Russian supplies. But Moscow has said The sanctions led Swiss contractor Allseas to
that Washington is simply acting in the interests suspend pipelaying activities in December 2019,
of US LNG suppliers, which could lose market leaving just 6% of the pipeline left to complete.
share if Nord Stream 2 is completed. Russia then had to dispatch its own pipelaying
In reality, US opposition to the pipeline vessels to finish the job.
is likely grounded in concerns that it would Work on Nord Stream 2 did not resume until
strengthen economic ties between Russia and December last year, in waters off Denmark.
the EU’s de-facto leader Germany. Work is also underway off Germany, with the
The project is also opposed by a number of country’s Federal Maritime and Hydrographic
EU members in eastern Europe – countries that Agency ruling on May 18 that a 2-km stretch of
were in Moscow’s orbit during the Soviet era but the pipeline in the German exclusive economic
now are eager to sever political and economic zone could be laid.
ties with Russia. The pipeline could be completed by Septem-
Nord Stream 2 has had a difficult birth. Gaz- ber, Russian officials have recently said.
prom reached an agreement to build the pipeline
in 2015 with European partners Royal Dutch Other obstacles
Shell, E.ON, OMV, Wintershall and ENGIE. Even with the US opting against further sanc-
Despite objections from some EU governments tions against Nord Stream 2, the project still faces
citing geopolitical reasons, financing deals were obstacles. For one, there are the current US sanc-
signed for the project in 2017. Originally, the tions to consider. The measures target all com-
partners wanted to form a consortium to build panies involved in Nord Stream 2’s installation,
and operate the pipeline, but doing so required certification and insurance. Around 20 entities,
approval from Polish regulators given Nord mostly insurers, have reportedly left the project
Stream 2’s impact on Poland’s gas market. The in recent months, fearful of Washington’s wrath.
regulators refused to grant this approval, how- In the interests of German relations, Biden
ever, and instead, Gazprom secured loans from will likely seek to lift these sanctions, in return
its partners to finance construction. Pipelaying for some assurances that Russia will continue
operations then commenced in September 2018. transiting its gas via Ukraine after the current
The Nord Stream 2 operating company, contract expires at the end of 2024. This matter is
wholly owned by Gazprom, had to obtain per- likely to be discussed at the upcoming US-Russia
mits from Germany, Finland, Sweden, Rus- summit, if it materialises. The meeting between
sia and Denmark to build the pipeline in their Biden and Putin will most likely to take place
waters. Getting approval from Denmark took far in June in Switzerland, Russia’s Kommersant
longer than expected, however. The green light reported on May 18.
was finally given in October 2019, leaving Russia Another difficulty comes from EU regula-
not enough time to finish the pipeline by the end tion. The EU introduced amendments to its gas
of that year as hoped. directive in May 2019, requiring bloc rules on
The delay had a major impact, as the Trump unbundling and third-party access to be applied
administration began imposing sanctions on to pipelines to and from third countries. The
the project in December 2019, provoking a amendments allowed for national regulators to
backlash from Germany, which accused the US grant exemptions, but Germany’s energy and
of interfering with internal European affairs. To infrastructure watchdog Bundesnetzagentur
an extent, the sanctions even strengthen Berlin's decided against this in May 2020. This has raised
resolve, despite calls to withdraw support to the prospect that Gazprom might have to divest
Nord Stream 2 in light of the poisoning of Rus- the pipeline, or offer up its capacity to other gas
sian dissident Alexei Navalny in August last year. companies in Russia. ™

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