Germany Looks To Protect Russia-Led Nord Stream 2 From US Sanctions

Authored by Charles Kennedy via OilPrice.com,

The German state where the controversial Russia-led natural gas pipeline Nord Stream 2 is planned to land has proposed the creation of a state-protected foundation that would hold the assets of Nord Stream in a bid to protect the project from U.S. sanctions, Bloomberg reported on Friday, citing a proposal of the provincial government of Mecklenburg–West Pomerania.

The proposal is to hold the Nord Stream 2 assets inside a foundation whose official purpose will be to protect the environment, according to the document Bloomberg has seen.  

The United States, several European countries, including the Baltic states and Poland, as well as the European Union (EU), have expressed concern about Russia using gas sales and its gas monopoly Gazprom as a political tool.

Germany, for its part, is looking at the economic benefits of the Nord Stream 2 project.

In July, the United States warned the companies that were helping to complete Nord Stream 2 that they should ‘get out now’ or face the consequences, as the Trump Administration stepped up efforts to stop the construction of the controversial Russia-led pipeline in Europe.

“It’s a clear warning to companies aiding and abetting Russia’s malign influence projects will not be tolerated. Get out now, or risk the consequences,” U.S. Secretary of State Mike Pompeo said in mid-July.  

In October, the U.S. Department of State said it was broadening the sanctions against service providers and those funding vessels involved in the construction of Nord Stream 2 in a fresh attempt to prevent the project from completing. 

The annual U.S. defense bill, the National Defense Authorization Act (NDAA), also targets the pipeline, targeting any company providing any help for the completion of the pipeline. The U.S. Senate is expected to vote on bill, which passed in the House, this week.  

It’s unlikely that German lawmakers and politicians will decide on the regional proposal to shield Nord Stream 2 from U.S. sanctions before the end of this year, Claudia Mueller, a lawmaker in federal parliament representing Mecklenburg-West Pomerania from the opposition Greens told Bloomberg.

Meanwhile, as RFE/RL staff report, work has resumed in Baltic Sea waters off the German coast on the controversial Nord Stream 2 natural-gas pipeline, project managers said in a statement on December 11. The statement said the pipe-laying vessel Fortuna is laying a 2.6-kilometer section of the pipe “in the German Exclusive Economic Zone.”

The same day, Germany’s Authority of Waterways and Shipping Management warned mariners to avoid the construction area for the rest of the month, saying that “anchoring or fishing is not permitted in the area of the planned pipeline.”

Work on the $11 billion pipeline, which will double Russian natural-gas deliveries to Germany, has been suspended since late 2019 after the United States approved asset freezes and visa restrictions on companies involved in the project.

The administration of U.S. President Donald Trump has harshly criticized Germany and other European countries for relying on Russia for energy. Other nations, including Poland, Ukraine, and the Baltic states also oppose the pipeline, arguing that Moscow has a record of using its energy supplies to exert political pressure.

The U.S. Embassy in Berlin on December 5 called on the German government to halt construction of the pipeline.

“Now is the time for Germany and the EU to call for a moratorium for the pipeline’s construction,” Robin Quinville, charge d’affaires at the embassy, told the newspaper Handelsblatt on December 5.

This would send a clear signal that Europe “no longer accepts Russia’s sustained malevolent behavior,” she said.

Russia’s state-controlled Gazprom has a majority stake in the project, while Germany’s Wintershall and Uniper groups, joint Dutch-British oil major Shell, France’s Engie, and Austria’s OMV are also participating.

Russia has pledged to complete the project using its own resources despite U.S. opposition. The pipeline still has 16 kilometers left to be built in German waters and another 60 kilometers in the Danish section.

Russia, which initially expected to complete the pipeline in early 2020, has accused the United States of using energy sanctions as a “weapon” to open new markets for its oil and gas industry.

After the U.S. sanctions were passed, Russian President Vladimir Putin said he hoped the pipeline would be completed by early 2021.

The first phase of the project, Nord Stream 1, began operation in 2011.