Nord Stream 2 restarts pipelay; US to consult EU on sanctions

LONDON (ICIS)–The US Congress has approved new sanctions against Russia’s Nord Stream 2 pipeline project but Washington plans to consult European governments before imposing such sanctions.

EU’s input may soften or delay their implementation.

The legislation, passed both by the Senate and the House last week, is now with the US president, whose signature is required by the end of the year. The pipeline construction has been on hold since December 2019 due to US sanctions but resumed last Friday.

The new sanctions target those who provide insurance, certification, or port services to pipelayers contracted for the offshore pipeline.

In mid-August, an EU delegation in Washington officially opposed the US threat of additional sanctions against the pipeline. EU member states could join on the outreach on a voluntary basis and 24 out of the 27 member states were reported to have joined it. This indicates that, when consulted, the EU is likely to oppose the implementation of the new US sanctions.

Once finished, the 55 billion cubic meter (bcm)/year Nord Stream 2 will have the capacity to transport 27.5% of Russia’s yearly piped gas supplies to Europe, based on volumes sent in 2018 and 2019. Russian producer Gazprom said in its investors day presentation in February that it plans to keep its supplies to Europe at about 200bcm/year until 2030. The Nord Stream 2 capacity is sufficient to satisfy almost 11% of EU gas needs based on 2019 demand, according to data collated by ICIS.

NEW US SANCTIONS

The sanctions target foreign persons who provide:

– Underwriting services, insurance or reinsurance for Nord Stream 2 pipe-laying vessels and such services are necessary for the completion of Nord Stream 2,

– Services or facilities for technology upgrades, installation of welding equipment for retrofitting or tethering of, those vessels, if these services or facilities are necessary for the completion of Nord Stream 2,

– Services for the testing, inspection or certification necessary for the completion or operation of the pipeline.

No later than 60 days after the enactment of the legislation and every 90 days thereafter, the US State Secretary, in consultation with the Treasury Secretary, shall submit to the appropriate congressional committees a report that:

-identifies those providing the abovementioned services or facilities,

-describes the nature of the consultations with the governments of EU member states, Norway, Switzerland and the UK, and any concerns these governments raised.

PIPELINE CONSTRUCTION

Nord Stream 2 is an offshore pipeline composed of two parallel lines in the Baltic Sea.

Pipe-laying of two parallel underwater pipelines through the pipe-laying vessel Fortuna is scheduled to take place until around 31 December 2020, German Waterways and Shipping Authority Stralsund stated in a notice to mariners on 11 December. On 15 December, vessel tracking website MarineTraffic showed the Fortuna pipelayer in the zone, indicating that pipelay was still underway.

Fortuna will lay a 2.6 km section of the pipeline in the German Exclusive Economic Zone, the project developers told ICIS on Tuesday, also confirming the restart of pipelay. “All construction works are implemented in full compliance with existing permits. We will inform about further offshore construction activities in due time,” the company added.

Russia’s Fortuna is an anchored vessel and was initially contracted to lay pipes in Russian waters. Non-anchored vessels were contracted to build most of the pipeline but had to withdraw from the project in December 2019. In July 2020, Denmark agreed that both types of vessels may be used. This indicates that once it finished the German section, Fortuna could finish the Danish section too.

Fortuna averages 1.5km/day , according to Russian newspaper Kommersant. The vessel’s owner MRTS did not respond to ICIS to confirm this. If the average is correct the vessel could potentially finish the Danish section in 107 days or around 3.5 months.

As of 15 December, the Danish Maritime Authority had not received any information on a restart of pipelay in Denmark. Pipelay in Denmark is suspended until further notice, according to the latest Danish Notice to Mariners regarding the project, dated from 23 December 2019. There remains around 160km of pipes to lay in the Danish Exclusive Economic Zone.