Nord Stream 2, a 1,225km (760-mile) su...">
Nord Stream 2, a 1,225km (760-mile) su...">

US issues further sanction threats over Nord Stream 2

Nord Stream 2, a 1,225km (760-mile) subsea pipeline being constructed between Germany and Russia, has come under fire again from the US with the Secretary of State Antony J. Blinken releasing a statement that any entity involved in the project could be subject to sanctions.

The Nord Stream 2 project is being led by Nord Stream AG, whose majority shareholder is the Russian state company Gazprom. It would see the installation of a further two gas lines to pump more gas to Europe via the Baltic Sea. Nord Stream 2 got the go-ahead in 2015, with a financing signed between Gazprom, Royal Dutch Shell, E.ON, OMV, and Engie.

Construction permits for German waters were issued in 2018, and construction has since commenced. Completion is expected by the end of the year or Q1 2022 at the latest. Combined with, Nord Stream 1, the project could see the import of 10 billion m3 of gas from Russia every year. The US Secretary of State issued the following statement: "As the President has said, Nord Stream 2 is a bad deal — for Germany, for Ukraine, and for our Central and Eastern European allies and partners. The Department is tracking efforts to complete the Nord Stream 2 pipeline and is evaluating information regarding entities that appear to be involved.

"As multiple US administrations have made clear, this pipeline is a Russian geopolitical project intended to divide Europe and weaken European energy security. The sanctions legislation Congress passed in 2019 and expanded in 2020 has significant support from a bipartisan Congressional majority.

"The Biden Administration is committed to complying with that legislation. The Department reiterates its warning that any entity involved in the Nord Stream 2 pipeline risks U.S. sanctions and should immediately abandon work on the pipeline."

This latest sanction threat from the Biden Administration follows actions from the previous two presidents who had opposed the projects claiming that it would threaten Europes Energy Security and potentially deprive Ukraine of transit fees.

A number of companies left the project earlier this year over concerns of sanctions. This includes Baker Hughes, AXA Group and 16 other companies, the majority of which are insurance firms.

The European Union issued a statement last month and outlined that "For the European Union as a whole, Nord Stream does not contribute to security of supply" and any decision to halt the project would need to come from Germany.

Angela Merkel, Chancellor of Germany, who in favour of the project has yet to issue a statement on the recent sanction threats from the US.

Nordstream 2 is being toted as a quick fix for Germanys energy supply concerns as it reduces its dependancy on coal power stations and transitions to more sustainable sources of power. The country rejected nuclear power in the wake of the Fukushima nuclear disaster in 2011 and proceeded to permanently close eight nuclear plans throughout the country.

The German power network reacted by increasing power output from its coal and lignite power plants substantially. Last year, the German parliament adopted the countrys coal exit law which is expected to see lignite energy production is drop to 15GW by end 2022 and coal the same. By the end of 2038, no coal power faculties are to be active in Germany. The phase out is dependent on energy security and social policy decisions that will be verified in 2023, 2026 and 2029. Part of the road map is to construct a number of gas fired power plants which of course could be impacted if Germany is unable to secure more gas supplies.

Germany has also looked to offshore wind to ease some of its energy burden. A total 7.6 GW of offshore wind energy is supplying German homes, with a further 3.1 GW in the pipeline following the 2017 and 2018 WINDSEEG  tenders. In June last year offshore wind targets were raised from 15 GW to 20 GW by 2030 and 40 GW by 2040.
This was followed by Germanys Federal Maritime and Hydrographic Agency (BSH) finalising an updated Area Development Plan (FEP) in December 2020, confirming revised locations and scheduling for offshore wind tenders and grid connections to reflect the new targets. The FEP (2020) confirms tender areas needed to meet the 2030 target and an additional 10 GW to be tendered by the end of 2025 and commissioned in 2030.

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