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New US sanctions will not stop Nord Stream 2 construction - experts

It will not lead to a new suspension of the project or a revision of the timing of its implementation, according to experts interviewed by TASS

MOSCOW, March 22. /TASS/. The threat of potential US sanctions against the construction of the Nord Stream 2 gas pipeline - Nord Stream 2 AG - will not lead to a new suspension of the project or a revision of the timing of its implementation, according to experts interviewed by TASS.

Earlier, Bloomberg, citing sources, reported that an insurance company providing services under the project, a number of companies that cooperate with pipelayers, as well as the operator of the project itself, Nord Stream 2 AG, are potentially facing another US sanctions.

Most Russian experts regard potential US sanctions as perfunctory. "They [the United States] continue to make performative announcements, maybe they will even impose some performative sanctions, but they will finish building the pipeline anyway. This is inevitable," Director General of the Institute of National Energy Sergey Pravosudov told TASS.

Director of the National Energy Security Fund Konstantin Simonov is also confident that the inclusion of Nord Stream 2 AG in the US sanctions list would not change the situation around the project.

"Nord Stream 2 AG does nothing only by itself: it does not lay the pipe, it does not insure. It acts as an operator, which means that it pays for the services provided to it by other companies. The US cannot block the accounts of Nord Stream 2 AG, they cannot ban it from buying services from the owner of the Fortuna vessel, because the owner is already under sanctions," Simonov explained.

Under sanctions conditions

By now, almost all companies involved in the gas pipeline construction project are under sanctions or threatened by them, but despite this, Nord Stream 2 pipelaying is in full swing - more than 90% have already been laid.

In December 2020, Nord Stream 2 AG managed to resume pipe construction after a year's pause. Currently, two Russian pipelayers - the Fortuna vessel and the Akademik Cherskiy vessel - have permission to lay the gas pipeline from the Danish authorities. This means that Fortuna and Cherskiy have the necessary certificates for the equipment, although it was previously reported that some companies refused to participate in the project.

Senior Director at Fitch Dmitry Marinchenko, in turn, believes that US sanctions against Nord Stream 2 AG may create additional obstacles to the project’s completion. "They can complicate and slow down the project’s implementation and create additional legal risks," he said, noting that the fate of Nord Stream 2 largely depends on the position of Berlin, and as long as the latter "continues to consistently support the project, chances for its successful completion remain reasonably good. "

Managing Director of Univer Capital Artem Lyutik, does not rule out an increase in the cost of the project due to new sanctions, but he is also confident that it will be completed. "The construction of Nord Stream 2 is practically completed, and even in the case of new measures, the Russian side will still be able to freely finish laying pipes and launch the gas pipeline," he said.

Limit reached

At the same time, according to Simonov, the United States has almost completely exhausted its resources to stop the construction of Nord Stream 2.

"The only decisions left are the ones that are on the verge of a complete collapse of relations not even with us, but with Germany and a number of other European countries. For example, if the United States demands a refusal from purchasing Russian gas. This requirement is feasible only if Europeans in the literal sense of the words will begin to freeze and remain without electricity. This is no exaggeration - it is simply physically impossible to close the [European] energy balance today without Russian gas," Simonov said, noting that he considered such scenario unlikely.

"Until recently, arguments about the need for Nord Stream 2 for the stability of supplies from Russia to Europe were countered by the talk about the surplus of existing gas transmission capacities. Last winter showed that the Nord Stream 2 is necessary for Europe not only in the long term, but even in the short term," Deputy Head of Energy Sector Research Division at the Institute for Natural Monopolies Research (IPEM) Evgeny Rudakov said.

According to him, the average level of gas reserves in underground storage facilities in Europe fell to 33.6% by March 18 against 56.5% in March 2020.