New US sanctions call into question Nord Stream 2 completion date

LONDON (ICIS)–The US government sanctioned Fortuna, the last pipelaying vessel left in the Nord Stream 2 project, US State Secretary Mike Pompeo announced on Tuesday.
This adds uncertainty regarding the completion date of the project, already delayed by over a year.

Nord Stream 2 is a pipeline between Russia and Germany under the Baltic Sea. Once finished, the project 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. Nord Stream 2’s capacity is sufficient to satisfy almost 11% of the EU’s annual gas needs based on 2019 demand, data collated by ICIS shows.
US sanctions forced Nord Stream 2’s main pipelayers to withdraw from the project in December 2019. Russian pipelayer Fortuna resumed work in German waters in December 2020 and was planned to resume work in Danish waters from 15 January 2021 but had not yet done so as of Wednesday. There remain around 160km to lay in Germany and Denmark.
The EU does not recognise the extra-territorial application of sanctions adopted by third countries […] and opposes unilateral sanctions affecting EU companies conducting legitimate and lawful business activities, EU Foreign Policy Chief Josep Borell said on Monday referring to US sanctions on Nord Stream 2.

The commission’s objective has always been to ensure that, if built, Nord Stream 2 operates in respect of EU law, he added. Germany has notified transposition of the new EU Gas Directive, which is relevant for Nord Stream 2, he also said. This indicates the commission is unlikely to sanction the project so long as it complies with EU rules.
It is up to the European governments and the European Commission to protect companies operating in Europe from illegal extraterritorial sanctions, the pipeline’s promoters told ICIS on Wednesday.

EU PARLIAMENT RESOLUTION
Members of the EU Parliament (MEPs) called for additional EU sanctions against Russia over the recent imprisonment of Russian citizen Alexei Navalny, in a debate with Borrell on Tuesday.
Several MEPs called on the EU, and some national and regional governments in particular, to finally move ahead with cancelling the remaining work on Nord Stream 2, as a means to impose proper economic sanctions against Russia, a Parliament press release stated.
A resolution on Navalny’s arrest will be put to the EU Parliament’s vote on Thursday and will likely contain references to Nord Stream 2, a Parliament press officer told ICIS. However, it will not be legally binding, and it will be up to the EU Council and the commission to assess the resolution and decide on any action.

GERMAN REACTION
Chairman of the German Eastern Business Association (Ost-Ausschuss der Deutschen Wirtschaft) Oliver Hermes said on Tuesday that the sanctions are putting a strain on the new start in transatlantic relations.
“But we continue to see a good possibility that the German government will find a solution with the new Biden administration that will allow the pipeline’s timely completion and operation,” Hermes said. “Investment security is an essential achievement of the European internal market, and this should not be called into question,” he added.
The Association supports projects and claims of German companies and is sponsored by the Federation of German Industries, the Association of German Banks, and the Association of German Chambers of Commerce and Industry among others. Nord Stream 2 investors Uniper, Wintershall and Gazprom via its subsidiary Gazprom Germania are members of the Association.
“We stand by Nord Stream 2 and are not affected by the sanctions,” Uniper told ICIS on Wednesday. “We have particular hope that there is a clearly increased willingness in the US to hear the arguments of the Europeans. […] We are still convinced that the pipeline will be completed,” they added.