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Trump Considers Sanctions for European Pipeline

Monday, June 17, 2019

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On Wednesday (June 12), President Donald J. Trump announced that using sanctions to block controversial pipeline Nord Stream 2, were still being considered as a form of action against the Russia-Germany gas-carrying pipeline.

In Trump's view, the pipeline would further make Germany captive to Russian energy exports. His opposition to the pipeline has also been shared by previous U.S. presidents.

About the Pipeline

In May of last year, preparatory work for the controversial Nord Stream 2 pipeline began off the German coast, even though President Trump demanded that Germany drop the pipeline as part of a trade deal with Europe that wouldn’t include high tariffs on steel and aluminum.

Nord Stream 2 was created to allow Moscow to route gas exports around the Ukraine. Since the establishment of Nord Stream 1 in 2011, the transit of Russian gas through the Ukraine has declined. At the time, German chancellor Angela Merkel highlighted the fact that Germany’s support for the pipeline was in question, as the project could not go forward unless there were guarantees for the Ukraine in terms of overland gas transit.

By January, U.S. ambassador to Germany Richard Grenell threatened action against German firms involved with the project. Berlin replied that no plans had changed, and the project was still proceeding.

The same month, raw laying of the pipe for the project was slated to be complete by the middle of 2019, with the first line ready by November and a second by December.

In February, Germany and France reached an amended agreement regarding the Nord Stream 2 pipeline, mandating that the pipeline must meet four EU rules, which includes a stipulation that other supplies be allowed to access the pipeline. Germany has the final say in how these rules are applied, however.

According to DW Business, the pipeline is composed of two welded conduits, each with an inside diameter of 1.2 meters (4 feet) and will move gas from northwestern Siberia 1,230 kilometers (764 miles) across the Baltic seabed through Swedish, Finnish and Danish waters, to northeastern Germany.

The cost to build the Nord Stream 2 is being financed by Gazprom and its European partners: Germany's Wintershall and Uniper, Anglo-Dutch Shell, France's Engie and Austria's OMV. According to reports, the cost of building the pipeline is between 9.5 and 10.6 billion euros ($10.7 billion to $11.9 billion)

What’s Happening Now

Although Russia and Germany insist that Nord Stream 2 is a purely economic project, the U.S. and many European nations fear that the pipeline would allow Moscow to use energy supplies as a weapon against surrounding countries, ultimately helping Russia bypass infrastructure in the Ukraine without disrupting gas flows to Western Europe.

In response to that fear, last month, Sen. Ted Cruz, R-Texas, and Sen. Jeanna Shaheen, D-New Hampshire, filed a bill that would impose sanctions on vessels used to build the pipeline.

As a compromise, President Trump’s administration hopes to displace Russian pipeline supplies to Europe with liquified natural gas from the U.S. instead.

Already, Poland has entered an agreement with the U.S. to buy LNG as an attempt to reduce its dependence on Russian gas. The deal, signed by the Polish Oil and Gas Co., involves the purchase of an additional 1.5 million tons per year from Venture Global, increasing the company’s committed purchases from the venture to 2.5 million tons per year.

However, according to DW Business, companies involved in the pipeline’s construction are continuing to push forward, with plans to finish the project by the end of this year.

   

Tagged categories: Asia Pacific; EMEA (Europe, Middle East and Africa); Government; Infrastructure; Infrastructure; Latin America; North America; Oil and Gas; Ongoing projects; Pipeline; Pipelines; Program/Project Management; Project Management; Z-Continents

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