Gazprom Calls Washington’s Bluff on Nord Stream 2 Sanctions
America's Ambassador to Germany who thinks he's a viceroy is promising sanctions vs Gazprom
- German-US Ties Are Breaking Down, Virtual Radio Silence Between Merkel and Trump
- Germany’s Parliament Vice-President Calls for Empire’s Ambassador to Be Expelled ‘Immediately’
- Berlin Gets Unwanted Ronald Reagan Statue From Mike Pompeo
When the US imposed sanctions in December banning external contractors from working on Russia’s Nord Stream 2 gas pipeline to Germany, Washington hoped it had finally killed the controversial project stone dead.
It was wrong. Gazprom, the Kremlin-controlled gas giant behind the project, called Washington’s bluff. By vowing to complete the pipeline by itself, it has presented an ultimatum the US has long sought to avoid: if you want to stop the pipeline, you need to place sanctions on us. [Presumably, it is the secondary sanctions on dealing with Gazprom that would (maybe) do it.]
That is a gamble with potentially enormous consequences. Not only does Gazprom supply almost 40 per cent of Europe’s gas, it has also raised €4.75bn to pay for Nord Stream 2 from European energy companies Shell, Engie, OMW, Uniper and Wintershall.
Since it was announced in 2015, Nord Stream 2 has been mired in geopolitics, pitting Russia against the US and dividing the EU.
The pipeline would double the amount of gas piped directly from Russia to Germany and reduce the amount pumped through Soviet-era pipelines in Ukraine. As such, it has become a lightning rod for critics of Moscow who say Gazprom is seeking both to increase Europe’s dependence on Russian supplies and hurt Kyiv by depriving it of hefty transit fees.
The project weathered years of critical rhetoric, legal challenges and reluctance from Baltic countries whose permission was required to begin construction. Then US sanctions forced Swiss pipe-laying company Allseas to sail away from the project five months ago with 94 per cent of it completed, and just 160km of pipe left to lay on the bottom of the Baltic Sea.
Gazprom now says it will bridge that gap — in Danish territorial waters — alone and get the pipeline ready to start operations in spring 2021.
Whether it can actually do that looks set to depend on the Akademik Cherskiy, a pipe-layer that has spent most of the past three months sailing halfway around the planet.
The ship left Russia’s Pacific coast close to Japan in February to begin a roughly 20,000 nautical mile journey to northern Germany, taking the long way around Africa to avoid the Suez Canal.
But the Akademik Cherskiy is not a like-for-like replacement for the far superior craft used by Allseas. The vessel was purchased in 2016 by Gazprom as a last resort if US sanctions — first imposed in 2014 after Moscow’s annexation of Crimea — were extended to block its use of foreign contractors.
It represents an insurance policy the company hoped it would never have to use. Even with significant upgrades since it was bought, some experts question its ability to get the job done.
“We are forced to look for new solutions to lay the remaining 6 per cent of our pipeline,” Nord Stream 2 spokesman Jens Mueller said in a statement. “Nord Stream 2 as well as the companies supporting our project are convinced that the soonest possible commissioning of the pipeline is in the interest of Europe’s energy security [and] EU consumers.”
“I don’t think that the project can be stopped,” Russia’s foreign minister Sergei Lavrov said last week.
Some US officials appear to think otherwise. Richard Grenell, the US ambassador to Germany, said this week that Washington planned to impose new sanctions. US Senator Ted Cruz said this month that President Donald Trump would level sanctions against Gazprom if it completed the pipeline.
“The sanctions on Nord Stream 2 were endorsed by the entire US government and there is absolutely no wriggle room,” Mr Cruz said. “If Gazprom uses the Akademik Cherskiy to finish the Nord Stream 2 pipeline, [the president] must and will impose crippling sanctions on Gazprom.”
That would mark a significant escalation in the six-year sanctions campaign against Moscow. The US has long resisted similar sanctions against Rosneft, Gazprom’s oil-producing equivalent, fearing the knock-on impact on the global crude market.
The EU and Germany have condemned Washington’s December sanctions as an unfair imposition on the bloc’s energy policy, and would be thrown into crisis by any moves to level sanctions against its most important gas supplier.
Gazprom now appears to be gambling on its belief that the US would not go that far.
The Akademik Cherskiy is currently berthed in the German port of Mukran, where Nord Stream 2’s logistics base is located. If it soon sets sail for Danish waters loaded with pipes, the ball will be firmly back in Washington’s court.
Source: Financial Times