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German-US deal on Nord Stream 2 eliminates risk of pipeline downtime — Fitch

On July 21, the United States and Germany reached an agreement on the Nord Stream 2 project

MOSCOW, July 22. /TASS/. The agreement on Nord Stream 2, the authorities of the United States and Germany concluded on Wednesday, removes the uncertainties for the project’s future and eliminates the risk of the pipeline’s downtime due to sanctions, Senior Director at Fitch Ratings Dmitry Marinchenko told TASS on Thursday. 

"Eliminating uncertainty is the most important thing there. The already imposed American sanctions might not have prevented the completion of the construction, but the risk of new sanctions hung over the project like the sword of Damocles, in particular making the use of the pipeline impossible. Now this risk has been reduced to zero," he pointed out.

In his opinion, it is not clear on what conditions the transit contract between Russia and Ukraine can be renegotiated. But the issue at hand is about the minimum volume of 30-40 billion cubic meters per year, he believes.

"To some extent, this is even not bad for Gazprom - preserving the Ukrainian gas route, albeit in a shorter form, would enable Russia to increase supplies to Europe if demand grows," the expert said.

The need for the Ukrainian route may also be caused by potential restrictions on OPAL and EUGAL’s use, which are extensions of Nord Stream and Nord Stream 2, he concluded.

On July 21, the United States and Germany reached an agreement on the Nord Stream 2 project. In particular, Washington admitted that the sanctions would not stop its implementation, while Berlin pledged to seek an extension of the transit of Russian gas through Ukraine.

US President Joe Biden said that Nord Stream 2 was 99% complete and it was impossible to stop its construction.

"Should Russia attempt to use energy as a weapon or commit further aggressive acts against Ukraine, Germany will take action at the national level and press for effective measures at the European level, including sanctions, to limit Russian export capabilities to Europe in the energy sector," the US State Department said in a statement after the agreement was reached.

The Russian side has repeatedly stated that it has never used energy resources as an instrument of pressure.