Construction of the controversial Nord Stream 2 pipeline resumed in Danish waters over the weekend, while German Chancellor Angela Merkel and French President Emmanuel Macron said on Feb. 5 they were united in opposing U.S. sanctions on the project.
Around 120 kilometers of the pipeline remains to be laid in Danish waters as well as 30 kilometers in German waters according to Russia’s state-owned giant Gazprom, which is behind the project.
If completed, the Nord Stream 2 pipeline would allow Russia to bypass Ukraine when transporting gas to European countries through Germany.
The unfinished $11 billion construction project launched in 2015 is one of the most hotly disputed issues between the United States and Germany since the U.S. started implementing sanctions on the pipeline in December 2019.
The U.S. Congress recently authorized the White House to impose new sanctions against companies building the Nord Stream 2 pipeline from Russia to Germany, as well as companies that provide insurance, certification and technical services to the construction vessels.
Former U.S. Secretary of State Mike Pompeo said on Jan. 19. that the U.S. sanctioned the Russia-based owner of the pipe-laying vessel Fortuna because of its role in the project.
However, Bloomberg cited unnamed German officials who believe that new sanctions will not come into effect on Feb. 14 as initially expected and that the new administration will be less confrontational about the project.
Merkel told the media she is optimistic about talks with the Biden administration.
“So maybe the differences aren’t as big as they may appear,” she said.
Despite growing opposition from other EU members and the U.S. over the unlawful arrest of Kremlin critic Alexei Navalny on Feb. 2, Merkel and Macron vowed to maintain diplomatic ties with Moscow.
If Nord Stream 2 is completed, it will double the amount of Russian natural gas exports to Germany to 110 billion cubic meters annually, bypassing Ukraine.
Many German officials support Nord Stream 2, saying it is just a commercial project.
“Business relationships and business projects that have existed for decades are one thing and serious human rights violations and our reactions to them are another,” Germany’s Economy Minister Peter Altmaier said to German daily Bild Am Sontag on Feb. 7.
Navalny, 44, was sentenced to almost three years for violating his parole in an alleged embezzlement case. He was arrested after returning home from Germany.
Navalny had been receiving treatment from a poisoning attack that he blames on the Kremlin and the Russian secret service, but officials in Moscow have denied any involvement.
His arrest and imprisonment sparked protests all across Russia and the Kremlin expelled three European diplomats on Feb 5. accusing them of taking part in “unauthorized” rallies supporting Navalny.
Some EU countries including Poland called for Nord Stream 2 sanctions over Navalny’s arrest. Germany has refused so far.
The U.S. and several EU members also argued that the project will increase Europe’s dependence on Russian gas, but Germany supports the project which could make it the main gas supplier of the bloc.
With Germany’s help, Russia and Ukraine signed a five-year agreement until 2024 that guarantees a fixed amount of gas transmission through Ukraine each year. Starting in 2021 through 2014, the annual guaranteed amount is at least 40 billion cubic meters — out of the more than 200 million cubic meters that Russia exported last year. But that total is down from the 65 billion cubic meters that Russia guaranteed in 2020. Acting Energy Minister Yuriy Vitrenko secured the transit agreement under which the Kremlin must pay Ukraine at least $7.2 billion over the course of the contract for transmission — irrespective of whether the stalled Russian-German Nord Stream 2 pipeline goes online.
However, the project is unlikely to be finished soon according to Swedish economist Anders Aslund, who told the Kyiv Post it would take more than a year to be done.
“The U.S. sanctions are extensive and effective. The Russian pipelaying ships need third-country certification and insurance, and they cannot get that from non-Russian reputable companies,” he told Kyiv Post on Feb. 8.
Gazprom has acknowledged in a January eurobond prospectus that there is a real possibility that the project may be suspended or scrapped due to political pressure.
