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Nord Stream 2 Confrontation

English translation of two Nord Stream 2 articles published today by the Dutch FD.

Berlin convinced: sanctions cannot stop the construction of the last 160 km of Nord Stream 2

By Pieter Lalkens and Jeroen Groot: 24 Dec 2019

The Solitaire was one of the ships of the Dutch-Swiss offshore company Allseas who worked on the Nord Stream 2. Gas pipeline. Photo: Reuters

In brief

  • Allseas has stopped the construction of Nord Stream 2 under pressure from the American sanctions.
  • But the gas pipeline is simply being phased out, German politicians expect.
  • The latter does entail delays and higher costs.

Although the Dutch-Swiss offshore group Allseas has stopped the construction of Nord Stream 2 under pressure from US sanctions legislation, the gas pipeline from Russia to Germany will be phased out in the view of German politics. The sanctions will only lead to a few months delay and higher costs.

“I assume that the Nord Stream 2 gas pipeline will be delivered in the second half of 2020,” said Peter Beyer, member of the Foreign Affairs Committee of the German parliament, in a conversation with radio station Deutschlandfunk on Monday.

The CDU politician is also coordinator for the German transatlantic policy. “There are alternatives, but that means delays and higher costs.” Russian foreign minister Lavrov also said earlier that the gas pipeline will be phased out anyway.

55 billion cubic meters

Nord Stream 2 runs from the Russian Oest-Luga through the Baltic Sea and Baltic Sea to the German Greifswald. The pipeline would initially be delivered in the first half of 2020. It is actually about two parallel pipes, each of 1230 kilometers. Cost of construction: $ 11 bln.

The pipeline can transport 55 billion cubic meters of Russian gas to Germany every year. This should increase European energy security. The Russian company Gazprom supplies the natural gas. Partners are also the Austrian ÖMV, the German companies Uniper and Wintershall, the French Engie and the Anglo-Dutch Shell.

Threat

However, US President Trump says he sees the gas pipeline as a risk to European energy security and a threat to national security. Last Friday, he signed a sanctions law against companies that lay the pipeline on the seabed. For Allseas, which also has activities in the US, this was a reason to stop the work immediately.

However, it is still unclear who will have to lay the remaining kilometers of the pipeline as a replacement for Allseas. In a press statement on Monday, Nord Stream 2, the consortium behind the gas pipeline, says that of the total length of 2460 kilometers, “more than” 2300 kilometers have been installed. In addition, the organization says it is ‘continuing to work on a fast commissioning’ of the gas pipeline.

Heavy and deep

According to a spokesperson, Allseas, owned by Edward Heerema, is one of the few offshore companies that can carry out an order of this size within a relatively short period of time. Only the Italian Saipem would still be able to, but that company will also have to deal with any American sanctions.

The spokesperson for Allseas: ‘This project is special, not only because the pipeline must be laid at depths of 50 to 210 meters. It is also about the weight of the pipes. They have a diameter of 1.20 meters and have a concrete coating. ”

Russian ships

The Bloomberg news agency cites the German parliamentarian Timon Gremmels, a member of Merkel’s coalition fellow SPD. According to him, the business consortium behind Nord Stream 2 could start using ships under the Russian flag. However, he does not provide details, but with those ships, piping will be more difficult and slower than expected.

“There is probably a plan B, but it is not ideal to switch horses just before the finish,” said Gremmels, also spokesperson for energy policy at the SPD. “The sanctions are an incredible provocation, but will not stop the project.”

Gas price is falling

Gas traders and buyers in Europe seemed to have little concern on Monday about the sanctions against the Nord Stream 2. The gas price, on the other hand, fell sharply, to more than 8% at the end of the trading day. “The pipeline is almost ready, the market seems to assume that it will come off anyway,” said ING’s commodities analyst Warren Patterson.

“Moreover, the construction of the Nord Stream 2 does not necessarily mean more or less gas on the market,” said Patterson. ‘It is more of an alternative route at the moment. Russian gas is now for the most part supplied via Ukraine. ” That country has just signed a new contract with Russia on the gas transit rights. “That brings relief to the market and therefore decreasing prices, because the old contract expired on January 1”.

Enough work

The Nord Stream 2 project was the largest order for Allseas to lay a pipeline in the history of the group. The spokesperson does not want to comment on the financial consequences, but does say that there is a situation of force majeure. According to him, there are plenty of other orders for the ships of the group, including the Pioneering Spirit and the Solitaire.

SOURCE ARTICLE

RELATED FD ARTICLE

Russia engaged in its own sanctions against US after Nord Stream 2 punitive measures

Joost Bosman: 24 Dec 2019

Russia is looking for counter-actions after sanctions from the US concerning the construction of Nord Stream 2.

On Friday, the US imposed sanctions on companies that participated in the construction.

The Dutch company Allseas is already withdrawing its ships.

Russia is going to retaliate the sanctions of the United States against companies that are working on the Nord Stream 2 gas pipeline. Russian Prime Minister Dmitry Medvedev ordered the government to work out counter sanctions on Monday.

According to Medvedev, the punitive measures imposed by Washington are “absolutely anti-competitive in nature” and “they do not comply with the principles of international law and international trade.” The Russian Prime Minister also argues that sanctions harm the interests of many European countries.

Earlier on Monday, Russian Foreign Minister Sergei Lavrov had already fought hard for the US. According to the minister, the sanctions show that the US is “unreliable”.

“Europe too dependent”

On December 21, US President Donald Trump signed a draft bill on the defense budget for 2020. This also provides for punitive measures against Nord Stream 2. The pipeline runs from St Petersburg via the Baltic Sea to the German north coast and is completed 130 kilometers after . Every year Nord Stream 2 has to bring around 55 billion cubic meters of gas to Europe.

The US believes that the pipeline makes Europe too dependent on Russian gas and fears for the (energy) safety of the continent. Russia and Germany, on the other hand, argue that this is a purely commercial project and that Moscow will not use Nord Stream 2 as a geopolitical lever when Russia comes out.

Allseas withdraws ships

In the meantime, the Russian business newspaper Kommersant reports, the Dutch-Swiss company Allseas has already started to withdraw its ships from the project on Monday. Allseas was one of the companies targeted by the sanctions, and last Friday the company said it would suspend its work on Nord Stream 2 for the time being.

“A Russian ship can also do the last kilometers. It will only take a little longer. ”• Aleksej Grivatsj, deputy general manager for gas issues
If that were to remain the case, then according to Alexei Grivatsj, deputy general manager for gas issues at the National Energy Security Fund in Moscow, this would not jeopardize the completion of Nord Stream 2. The consortium that Nord Stream 2 is creating will certainly find an alternative, he thinks. Although that will not be foreign companies. They are now too afraid of the sanctions.

“But a Russian ship can also do the last kilometers. It will only take a little longer, “said Grivatsj. According to sources from Kommersant, the Russian gas company Gazprom will indeed construct the last 130 kilometers with its own pipe layer, the Akedemik Chersky, assisted by its own ship.

Internal political game

The commissioning of Nord Stream 2 will take place later than planned. “It is difficult to estimate, but in a few months the management can be phased out,” thinks Grivatsj. That will certainly cost extra money, among other things for a different pipe layer and other supply vessels, as well as the storage of pipes. According to Grivatsj, how much the extra costs will amount to is currently impossible to determine.

Grivatsj does not expect a claim for damages against Allseas. “The company worked in good faith and it was not his fault that the Americans were imposing illegal sanctions and that European governments could not protect their companies against this insidious attack.”

He suspects an internal political game in America behind the sanctions. “Next year there are presidential elections and the Democrats are trying to discredit President Trump: if he had not agreed to the sanctions, he would be pro-Russian. If he did agree, as now, he would drop European allies.”

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