Denmark Gives Russia's Nord Stream 2 Pipeline a Path to Completion
July 09 2020 - 2:11PM
Dow Jones News
By Brett Forrest
Denmark granted unexpectedly swift approval for resuming
construction of the Russian-backed Nord Stream 2 pipeline in Danish
waters, potentially clearing one of the last hurdles for completing
the project at the center of a geopolitical tussle.
The pipeline, once finished and certified, will deliver Russian
natural gas to Germany, and while those two governments have
characterized the project in commercial terms, U.S. lawmakers and
officials fear that Nord Stream 2 will give Moscow greater
political leverage across Europe.
U.S. sanctions put in place last year stalled construction of
the pipeline in its last stretch, primarily on the Baltic seabed in
Danish waters. Denmark generally prohibits vessels doing seabed
construction to anchor on the seafloor, due to the presence of
unexploded World War II ordinance, and Russia's pipe-laying vessels
generally rely on anchoring, rather than using a
computer-controlled system to maintain position.
Nord Stream 2 AG, a company owned by Russia's gas-export
monopoly Gazprom to construct and manage the pipeline, petitioned
the Danish regulator last month to use anchored vessels. The Danish
Energy Agency granted the approval Monday, ahead of an end-of-July
time frame earlier announced by a spokesman.
The Danish agency said in a statement that the remaining
construction lies "outside the area where bottom trawling,
anchoring and seabed intervention are discouraged due to the risk
posed by dumped chemical warfare agents."
Obstacles to finishing the pipeline remain, including renewed
efforts by the U.S. to impose new sanctions.
Denmark's faster-than-expected approval boosted a $9 billion
project that Russia and Germany have championed, over objections
from the U.S. and that will alter the energy map of Europe.
A spokesman for Nord Stream 2 AG said in a statement that the
company is considering different options for proceeding.
Russian officials have been adamant that the pipeline will be
completed despite obstacles, including U.S. attempts to stop it.
Earlier this year, President Vladimir Putin estimated that work
would be finished by the end of this year or early next year.
Nord Stream 2 will allow Russia partly to circumvent a pipeline
transit system that runs through Ukraine and has handled gas
deliveries for decades. Ukrainian officials have spent years
lobbying against Nord Stream 2, worrying that it will weaken
Ukraine against a stronger Russia, and Kyiv has found supporters in
Washington.
Sen. Ted Cruz (R., Texas) and Sen. Jeanne Shaheen (D., N.H.)
last year co-sponsored a bill that provided for the sanctioning of
companies supplying technical assistance to Nord Stream 2
construction.
The principal target was Allseas Group SA, a Swiss company that
supplied the main pipe-laying vessel. When this sanctions
legislation passed into law in December, Allseas abandoned the
project, and construction stalled.
Last month, the Senate approved a new Nord Stream 2 sanctions
bill from Sens. Cruz and Shaheen, folding it into a larger defense
authorization act. The Senate bill calls for sanctions against
companies that provide certification, port facilities, tethering
services or insurance to the project. The House is discussing a
similar measure.
"All options remain on the table" to prevent Nord Stream 2's
completion, a spokeswoman for Mr. Cruz said in a statement. She
said that the proposed new legislation "makes clear those involved
with vessels installing the pipeline or its certification will face
crippling and immediate sanctions."
Officials on either side of the fray remain focused on this
potential new round of sanctions and on the calendar.
Work on the 120 kilometers of pipeline to be constructed in
Danish waters is projected to take roughly four months and can
begin only after the Danish Energy Agency's appeal period expires
on Aug. 3. An additional 30 kilometers of pipeline in German waters
remains to be built.
The new sanctions are likely to be included in the National
Defense Authorization Act, which is expected to be signed in
November, according to a congressional aide.
If the legislation passes into law, insurers involved in the
project "will need to stop immediately," said Vadym Glamazdin, an
adviser to the CEO of Naftogaz, Ukraine's national oil-and-gas
company.
Companies providing the licensing and certification necessary to
make the pipeline operational may also likely choose to abandon it.
"Without this certification, the pipeline cannot be used even if
finished," Mr. Glamazdin said.
Write to Brett Forrest at brett.forrest@wsj.com
(END) Dow Jones Newswires
July 09, 2020 13:56 ET (17:56 GMT)
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