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The northern state of Mecklenburg-Western Pomerania wants to set up a foundation to support the completion of the Russian Nord Stream 2 gas pipeline, as further US sanctions against the project are threatened.
The state’s parliament gave the go-ahead on January 7th for an initiative to set up a foundation that could buy materials needed to build pipelines and thus circumvent Washington’s sanctions. Legislators approved EUR 200,000 ($ 245,000) in public money for the fund, while Gazprom-owned operating company Nord Stream 2 has pledged a further EUR 20 million. The foundation is headed by ex-Prime Minister Erwin Sellering, former MEP Werner Kuhn and entrepreneur Katja Enderlein.
“We think it is right to build the pipeline,” said Prime Minister Manuela Schwesig to reporters.
Completion of Nord Stream 2 will bring Germany significant economic benefits in terms of lower gas prices, transit revenues and increased energy security. At peak loads, the pipeline will allow up to 55 billion cubic meters of Siberian gas to flow into northern Germany per year.
Construction stalled in December 2019 after Swiss construction company Allseas was forced to withdraw as the US imposed sanctions on the project, leaving only 6% of the offshore section to be completed. Work resumed last month in German waters and is slated to resume on January 15 in Danish waters, with Russia using its own pipelayers.
Washington’s current sanctions are only aimed at companies providing pipeline lay vessels for Nord Stream 2. A planned second round, however, will expand the penalties to those who offer technical certifications and insurance for the works, as well as additional pipeline-laying activities such as surveying, trenching and rock laying.
The bill was part of a broader defense bill that US Congress approved but was vetoed by US President Donald Trump. The House of Representatives then voted to lift that veto, and the Senate followed suit on Jan. 1, which means the sanctions could come into effect over the next few weeks.
The US claims Nord Stream 2 will give Russia too much leverage over Europe and has promoted US LNG as a better alternative. But the pipeline enjoys strong support from the current federal government, led by the conservative Christian Democratic Union (CDU) led by Chancellor Angela Merkel. And that support has only solidified through US actions. Nevertheless, the pipeline in Germany is still controversial. Opposition politicians warn that they will lock the country in dependence on fossil fuels for longer.
Creating a government-backed foundation will make it harder for the US to thwart Nord Stream 2 through measures like freezing funds, as the foundation will have no commercial off-pipeline activities.
For its part, Russia is confident that additional US sanctions will not come too late. Russian Deputy Prime Minister Alexander Novak told Russian state television at the end of December that the pipeline would be completed because it was in Europe’s commercial interest. “It is a commercial project that is primarily in the interests of our foreign partners,” he said.
Nevertheless, the companies take the threat of sanctions seriously. Norway-based quality assurance company DNV GL said in early January that it would no longer offer pipeline integrity checking services for Nord Stream 2 due to Washington’s punitive measures.
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