UNITED STATES (OBSERVATORY NEWS) — The key subcontractor of Nord Stream 2, the Swiss-Dutch company Allseas, suspended the laying of pipes for the gas pipeline due to US sanctions. Work terminated “pending legal, technical and environmental clarification.” Meanwhile, US sanctions have been fiercely criticized in Europe and especially in Germany. The pipeline has already been completed by almost 90%, but a delay in putting it into operation can lead to a significant increase in gas prices – which in the current situation is very beneficial for over-supplying American suppliers and not at all beneficial for European consumers. Details are in the material of Izvestia.
On December 20, US President Donald Trump signed a document that has been passing through the US legislative and executive branches for several months. The sanctions against the builders of Nord Stream 2 were included as a separate article in the US defense budget for 2020. They will be comprehensive in nature and will apply not only to companies involved in construction, but also to individuals who own and operate these companies, as well as ships and their crews involved in laying the gas pipeline.
I must say that until the completion of the project there was only a little. Pipelayers need to lay a total of only 120 km on two pipelines, a few percent of what has already been done. Sanctions include one very important reservation: the American administration must submit to Congress within 60 days considerations as to which firms and individuals may be subject to restrictive measures. In two months, Nord Stream 2 could have been completed and the imposition of sanctions would have turned into a pure formality.
Nevertheless, Allseas announced the termination of its two vessels before the document was published by the US Presidential Administration. Despite the possibility of avoiding responsibility, the company, apparently, decided not to take risks. Especially since a few days earlier, Senators Ted Cruz (known for his active lobbying for the American gas industry) and Ron Johnson wrotea letter to her in which she unambiguously threatened with big problems in case of unwillingness to comply or attempts to circumvent American restrictions. “Even if your company works on the project even within one day after the publication of the sanctions document, the consequences can be devastating and fatal,” the letter said. When high-ranking representatives of the party ruling in the USA threaten in such expressions, proposals pass into the category of those that cannot be rejected.
Representatives of Europe, in turn, were outraged by the actions and rhetoric of the Americans. German Chancellor Angela Merkel said she did not support the practice of “extraterritorial sanctions”, and denied that the FRG was “backing down” under pressure from Washington. Ulrike Demmer, a spokeswoman for the German government, said the US was interfering in the internal affairs of Europe, and considered the argument by the Americans to be “unintelligible.” According to German Foreign Minister Heiko Maas, European energy policy is determined by Europe, not America.
The United States has long threatened Germany with measures against Nord Stream 2. However, it was believed that these warnings were demonstrative in nature and were aimed at persuading the FRG to increase its military budget and contributions to NATO’s overall security – Donald Trump complained more than once about the need for America to spend money on ensuring the defense capabilities of Europe. Such a sharp step towards the end of the year and literally a few weeks before the completion of the construction of the Stream became unexpected.
The decision to impose sanctions was taken against the backdrop of extremely low prices on the European gas market. In the spot market, American gas for Europe in early December cost about $ 5 per million British thermal units, or about $ 180 per thousand cubic meters. It is worth considering that this is a price when loading LNG free on board in US ports, respectively, after transportation to the EU and regasification, fuel can be significantly more expensive. Nevertheless, current prices are among the lowest for December over the past few years, due to a combination of warm winters and almost 100 percent filling of European gas storages.
If, with such a dynamic, Gazprom completes the construction of Nord Stream-2 in the next couple of months and launches gas for it, gas prices could sink even more, which would be bad news for American producers – especially considering the fact that in East Asia , in another important market for gas companies from the USA, now there is no gas shortage either. The market will be overstocked, and huge investments spent both on the development of gas production and on the construction of numerous LNG terminals in North America will bring losses.
In turn, the EU and, above all, Germany (a number of European countries also do not approve of the construction of the Nord Stream, especially after the parallel South Stream project was disrupted from Berlin) they risk losing considerable amounts due to the delay in putting the pipeline into operation – it’s about billions of euros. For Germany, the successful launch of the project is also important because, as the country that most actively supports the European Green Deal, it is interested in the decommissioning of coal-fired power plants as quickly as possible. Cheap Russian gas is becoming a strategic fuel, allowing you to gain time for the economy until the full transition to renewable sources – provided, of course, that this task is feasible in principle.
So far, however, we are not talking about disrupting the deadlines for completing the construction of Nord Stream 2. The operator of the Nord Stream 2 AG project assured that he will work with partners to complete the piping as soon as possible. According to Neftegaz, two Allseas vessels temporarily suspended work on December 6 due to bad weather. Then the pipeline continued to be built, having laid more than 27 km in a week. At the time of the imposition of sanctions, literally 10-15 days remained at the current pace of work until the end of construction, that is, one of the threads was supposed to be completely finished on New Year’s Eve, and the other in the first days of January.
In the absence of Allseas ships, the Russian pipe-laying vessel Fortuna, now located in the port of Mukrana on the island of Rugen in Germany, can come to the aid of Nord Stream 2. Its capacities allow laying pipes at a depth of up to 200 m, while the depth in the Danish section is no more than 25 m. Thus, the completion of construction in this situation is a technical issue. The completion deadlines may move by several months, but at the current level of readiness, it is unlikely that anything will prevent the launch of the Stream next year.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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