LONDON (ICIS)--The Nord Stream 2 natural gas pipeline will double Russia’s direct export capacity to Germany as a first entry point to the EU to 110 billion cubic meters (bcm) per year.
Its supporters, including Germany and other west-European member states, see it as a commercially sensible project, but its opponents, led by Poland and the US, consider it as a threat to the EU’s security and diversity of supply.
In December 2019, US sanctions forced key pipelaying vessels to stop working on the project. In mid-January, President Putin said Russia could finish building the pipeline on its own but its completion would be delayed to up to the end of 2020 or in the first quarter of 2021.
The Russian pipeline was initially scheduled for completion by the end of 2019. Delays beyond 2020 could restrain Russia’s pipeline export capacity to the EU.
This topic page brings together updates from ICIS on the pipeline's progress and the impact it is having on energy markets.
10 February 2020 17:47
Nord Stream 2 gas link completion may be possible with Russian ships
There are two pipe-laying vessels owned by Russian companies that could complete the Nord Steam 2 natural gas pipeline, although backers of the project have yet to provide plans.
There is about 7% still to be completed, all in the Danish Exclusive Economic Zone (EEZ), after Swiss company Allseas ceased work on the link due to US sanctions.
The Akademik Chersky and Fortuna pipe-laying vessels are potential options for Nord Stream 2 completion.
The first is set to undergo modernisation to allow it to work on Sakhalin in the Russian far east.
This leaves the Fortuna, which is currently in the German port of Mukran in the Baltic Sea, according to vessel-tracking website MarineTraffic, making it the most logical possibility.
An issue with this is that the Fortuna is equipped with an anchor system, not the dynamic positioning (DP) system required in the Danish construction permit.
The permit document states: “It is assumed that laying will be carried out using a lay vessel equipped with dynamic positioning.”
The use of DP vessels reduces the risk of encountering unexploded ordnances (UXOs) on the seabed, the document explains.
The Danish Energy Agency recently told ICIS: “It will be a concrete assessment if other ships than DP-vessels can be used for the pipe-laying activity as it is a concrete assessment with other possible changes.”
Adding that “the Nord Stream pipelines constructed in 2010/11 were laid by a vessel with anchors.”
This precedent indicates that the Fortuna could potentially work in the Danish EEZ.
The Castoro Sei pipelayer had an anchor system and built 70% of the first Nord Stream link.
3 February 2020, 12:28
Final technical, legal hurdles for Nord Stream 2 resolvable
Experts believe legal and technical challenges to the start of Nord Stream 2 flows can be resolved.
Once completed, Nord Stream 2 will double Russia’s direct export capacity to Germany as a first entry point to the EU to 110 billion cubic meters (bcm)/year.
Earlier in January, German regulator BNetzA launched the derogation procedure for the controversial pipeline upon its operators’ request.
“BNetzA could - but it is not a given - potentially stipulate some bespoke regime for Nord Stream 2, which would impose certain requirements on the way it is operated but perhaps short of a full-fledged derogation,” Oxford Energy Institute researcher Katja Yafimava told ICIS. “If it does so it this could be seen as Germany finding a way for Nord Stream 2 to operate, as Germany has always said that the pipeline would proceed if post-2019 Ukraine transit is guaranteed - which is the case with the new five-year transit contract,” she added.
“I cannot exclude that BNetzA would support Nord Stream 2’s arguments, i.e. the whole pipeline is finished as it is finished in German territorial waters and the final investment decision has already been made,” according to Mateusz Kubiak, senior analyst at Esperis Consulting, a Warsaw-based consultancy firm operating in energy and insurance markets.
“But it would be very hard to prove that such decision is in line with the directive. And for sure it would be challenged by some of the European countries,” he added.
20 January 2020, 17:32
More Nord Stream 2 delays could cut 20bcm of Russian gas supply to Europe
Europe could face a shortfall of over 20 billion cubic meters (bcm) of Russian gas supply in 2021 from 2020’s levels if Nord Stream 2 is delayed beyond 2020 and European demand remains stable.
This could also increase the bloc’s reliance on LNG imports, especially if next winter is cold.
Europe should have some flex from Norwegian pipelines if this happens, which ran with spare capacity throughout 2019.
Ukrainian transit volumes will drop to 40bcm from 2021 under the new transit deal, from over 60bcm/year during the past four years.
16 January 2020, 16:11
Croatian EU presidency’s focus: Energy Charter Tearty, energy transition
In the first six months of 2020, the Croatian presidency of the EU will follow the process of modernisation of the Energy Charter Treaty (ECT) - a crucial agreement that can affect the way the controversial Russian pipeline Nord Stream 2 is operated.
The decarbonisation of the gas market and the energy transition will be other priorities for the presidency, the Croatian environment and energy ministry told ICIS.
The ECT is an agreement between 53 parties, including most EU member states and some countries outside the bloc, which outlines a framework for trade and investment in energy.
In July, the European Commission obtained a mandate to negotiate changes to the ECT that would make it harder for the operator of Nord Stream 2 to defend their investment.
14 January 2020, 16:39
German regulator considers exempting Nord Stream 2 gas pipeline from EU rules
German energy regulator BNetzA has until 24 May 2020 to publish its decision regarding a potential exemption from EU rules for the Nord Stream 2 pipeline.
A recent announcement on BNetzA’s website said that the Nord Stream 2 conglomerate applied to the regulator for an exemption from the amended EU gas directive. The directive enforces EU unbundling and third party access rules on all pipelines connected to the bloc but originating from non-EU states.
In the case of Nord Stream 2, Gazprom owns both the pipeline and the gas coming through it.
The European Gas Directive was amended in early 2019 and member states have until 23 February to implement these changes into their national legislation, which Germany has already done.
There is a date inscribed in the updated German gas ordinance by which exemption decisions have to be made: 24 May 2020.
13 January 2020, 16:17
Nord Stream 2 to launch by end of 2020 or Q1 2021 - Putin
The Russian pipeline could be finished by the end of this year or in the first quarter of 2021, president Vladimir Putin said at a press conference following a meeting with German chancellor Angela Merkel on 11 January.
Nord Stream 2 is expected to double Gazprom’s export capacity to Germany to 110 billion cubic meters per year and was initially expected to be completed by the end of 2019 but recent US sanctions made the completion of the controversial project harder.
19 December 2019, 16:17
Nord Stream 2 sanctions to apply as soon as law is signed - US senators
Two US senators sent a warning letter to Nord Stream 2 pipelaying contractor Allseas asking them to stop building the Russian pipeline as soon as sanctions legislation is signed off.
“The consequences of your company continuing to do the work - for even a single day after the President signs the sanctions legislation - would expose your company to crushing and potentially fatal legal and economic sanctions,” the letter, from senators Ted Cruz and Ron Johnson, states.
13 December 2019, 12:17
US sanctions on Nord Stream 2 gas link unacceptable - German MPS
Several members of the German parliament’s energy committee have spoken out against US legislation to impose sanctions on companies involved in building the Nord Stream 2 natural gas pipeline.
Sandra Weeser, group spokesperson for the Free Democrats in the German commission for economics and energy, told ICIS: “The Trump administration is pretty clearly trying to threaten Germany. It is clear that energy security is a matter of national sovereignty, and the Americans know that very well.”
05 December 2019, 16:56
ICIS VIEW: Nord Stream 2 construction state of play
Construction is underway of the last section of the Russian pipeline. If the pipe-lay speed remains stable then Gazprom’s calculations to build the Danish section in five weeks remain valid and pipelay could be finished by the start of January.
But US sanctions could be voted in by mid-December, which would target the companies owning the vessels laying Nord Stream 2. If voted and observed, the sanctions could affect the completion of the 55 billion cubic meter (bcm) Russian pipeline.
4 November 2019, 17:14
Market more confident in Q2 2020 launch of Nord Stream 2
The TTF and GASPOOL Q2 ’20 gas contracts have shed more risk premium than the Q1 ‘20 equivalents since Russia’s Nord Stream 2 pipeline received a Danish construction permit.
This indicates that market participants are more confident in the pipeline starting deliveries from the second quarter of 2020 rather than in January as initially planned.
On 30 October, the 55bcm offshore pipeline connecting Russia to Germany received the final required permit to complete its construction in the Danish exclusive economic zone.
Image caption: Connecting pipe sections above water. Source: Nord Stream 2