Switzerland’s AllSeas Group SA said it would halt operations on the Nord Stream 2 natural gas pipeline from Russia to Germany, as President Trump approved sanctions targeting the project, Kallanish Energy learns.
Germany said Saturday the U.S. penalties are “incomprehensible” and interfere in its internal affairs.
The $11 billion project is nearly complete and has led Trump to previously call Germany a Russian captive. He has criticized the European Union for not doing more to diversify its natural gas supplies away from Russia, which supplies more than 33% of its gas.
Unclear if AllSeas needed to finish line
AllSeas, whose pipe-laying ships are laying the last section of the pipe in Denmark’s waters, had earlier said it would suspend work “in anticipation of the enactment of the National Defense Authorization Act (NDAA),” Bloomberg reported. It’s unclear if the work can be completed without the company’s assistance.
Moscow’s government condemned the U.S.’s move, insisting the sanctions would not stop Nord Stream 2. “Russia will continue to implement its economic projects irrespective of any sanctions,” the foreign ministry said, in a website statement.
Nord Stream 2 will flow as much as 55 billion cubic meters (1.94 trillion cubic feet) of Russian gas annually directly to Germany, doubling the capacity of the existing Nord Stream line.
Nord Stream 2 seen as ‘threat’
The U.S. and Eastern European nations see it as a threat to the Ukrainian transit route that has been in place for decades, bringing revenue to the smaller former Soviet Union nation. The new link theoretically gives Russia the ability to bypass Ukraine as a transit corridor.
The completion of Nord Stream 2 could would bring fresh supplies of gas to Europe. That would make it more difficult for the U.S. to gain a bigger position in shipping cargoes of liquefied natural gas via tanker to Europe.
Sanctions on the Nord Stream 2 pipeline were included in the 2020 NDAA after members of Congress pushed for their inclusion. The NDAA authorizes $738 billion in funding for the U.S. military and national security.
Gazprom reaches deal with Ukraine
The U.S. sanctions come as Gazprom reached a deal on extension of onshore transit to Europe via Ukraine, which has been the main route for Russian gas exports amid legal and political tensions between two neighboring nations.
Ukraine will offer Gazprom transit pipeline capacity of 65 billion cubic meters (2.30 Tcf) for the next year, while in 2021-2024 the booked capacity will reach 40 billion cubic meters (1.41 Tcf) per year, according to Gazprom.
Gazprom and Ukraine have also agreed to consider extension of the new transit deal on the same conditions through 2034, according to Ukraine’s energy ministry.
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