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So close: Nord Stream 2 gas link completion trips at last hurdle

Summary:
160km. That is all that is left to lay of the much-maligned Nord Stream 2 offshore gas pipeline from Russia to Germany. But those last few kilometers – less than 7% of the total length of the 2,460km two-string line – won’t be laid anytime soon, much to the frustration of Moscow. It could have been very different. If the authorities in Denmark had not waited until the end of October to award a permit for construction of Nord Stream 2 in its waters, the pipeline would likely already be completed and gas already flowing. And that would have given Moscow considerably more leverage in its negotiations with Ukraine over a new gas transit deal too. Construction permits from all the other countries involved – Russia, Finland, Sweden and Germany – were received well ahead of the original

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160km. That is all that is left to lay of the much-maligned Nord Stream 2 offshore gas pipeline from Russia to Germany.

But those last few kilometers – less than 7% of the total length of the 2,460km two-string line – won’t be laid anytime soon, much to the frustration of Moscow.

It could have been very different. If the authorities in Denmark had not waited until the end of October to award a permit for construction of Nord Stream 2 in its waters, the pipeline would likely already be completed and gas already flowing.

And that would have given Moscow considerably more leverage in its negotiations with Ukraine over a new gas transit deal too.

So close: Nord Stream 2 gas link completion trips at last hurdle

Construction permits from all the other countries involved – Russia, Finland, Sweden and Germany – were received well ahead of the original completion date of end-2019.

The permitting process in Germany was completed first – in March 2018 – followed by Finland (April 2018), Sweden (June 2018) and Russia (August 2018).

If the Danes had played ball, the US sanctions that finally stopped work on the project would have been irrelevant.

But, as it was, it was the inclusion of language in the US 2020 military spending bill threatening sanctions against companies helping to lay Nord Stream 2 that led Switzerland-based Allseas to suspend its pipe-laying activities.

Pipe-laying halted

Allseas’ vessels Pioneering Spirit and Solitaire had been busy laying the pipe in Danish waters since the end of November, but both vessels have now been demobilized.

“Allseas’ construction fleet has left the Baltic Sea and has been demobilized to prepare for other work,” the company told S&P Global Platts last week.

The Pioneering Spirit is now at the Norwegian port of Kristiansand, while the Solitaire is currently stationary off the Danish island of Agerso, according to cFlow, Platts’ trade-flow software.

Instead, Russia will need to look to its own fleet of pipe-laying vessels to complete the pipeline, which Russian energy minister Alexander Novak conceded is now only likely by the end of this year.

According to S&P Global Platts Analytics, the most likely candidate for laying the final kilometers is the Akademik Cherskiy, a vessel that fulfils the criteria for pipe-laying stipulated in the Danish permit.

However, any new vessel would need time to be prepared, according to Novak, plus it would likely take up to two months to arrive in Danish waters once it finally sets sail. As of January 3, the Akademik Cherskiy remained in Russia’s Far East near Vladivostok, according to cFlow.

Meanwhile, the US-enforced delay to Nord Stream 2 has not gone down well in Europe, either. German foreign minister Heiko Maas slammed the US sanctions against the pipeline, saying European energy policy should be decided in Europe, not the US.

“We fundamentally reject external interference and sanctions with extraterritorial effect,” Maas said. Others in Europe are happier. Andriy Kobolev, the CEO of Ukraine’s state gas company Naftogaz, thanked the US for its “firm support” of energy security in Europe.

But in reality, the US sanctions will likely only serve to delay Nord Stream 2’s completion by a year. That is, unless new tools are found designed to derail the project. And who would bet against that?

The post So close: Nord Stream 2 gas link completion trips at last hurdle appeared first on Platts Insight.

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