Gazprom Resumes Laying Nord Stream 2 Pipe as Germany, US Haggle Over Deal to End New Sanctions

The Nord Stream 2 consortium is laying pipe in Danish waters despite US sanctions. This comes as Washington and Berlin move to strike a deal that will allow the pipeline to be built on condition that Germany defends Ukraine’s interests as a transit state for Russian gas.

Source: TASS / Jens Buettner/German news agency DPA via AP.

Russia’s Gazprom has resumed work to lay the final 75 km of the Nord Stream 2 pipeline in deep water offshore Denmark as evidence builds that Germany is successfully working out a deal with the US to dodge the sanctions bullet.

The German newspaper Handelsblatt reported on Tuesday that “the US is signaling” that it is ready to end its sanctions threat, but only on certain conditions. Handelsblatt quoted a US official involved in the internal talks as saying that the US wants Germany to offer “a package solution” to minimize “geopolitical consequential damage to the pipeline.”

US conditions reportedly include:

  • A procedure to interrupt Russian gas deliveries to Germany via Nord Stream if Moscow were to cut Ukraine out of Russia’s European gas delivery system.
  • Renegotiation of an agreement that regulates Russian gas transiting Ukraine.
  • Germany’s pledge to help Ukraine expand its gas infrastructure for the transport of hydrogen.

Meanwhile, the Russian pipe-laying vessel Fortuna has begun working again even after having been sanctioned and labeled as “blocked property” by the US on 18 January.

By returning to work, it presumably has triggered an expanded set of US sanctions passed in early January. The US news site Politico noted that the US Congress has four additional bills related to Russian sanctions but none so far have been brought forward.

“All works are performed in line with the relevant permits; we will provide further information about the construction works and further planning in due time,” Nord Stream 2’s builders noted in a press release this week. Norway’s DNL GL and some German contractors have announced they will drop participation in Nord Stream 2 as long as sanctions are in place.

Media on both sides of the Atlantic are reporting that the green energy lobby in both the US and in Germany are also acting to ensure their interests are taken into account in whatever deal is ultimately struck.

The German broadcaster Deutche Welle (DW) reported this week that a German environmental NGO has published documents proving that the German government offered the US a sum of $1.21 billion to aid in the import of more US LNG if the US would drop its threat of new sanctions against Nord Stream 2.

The group, Environmental Action Germany (DUH) published the documents on Tuesday, the same day Handelsblatt reported on the movement in ongoing negotiations between Washington and Berlin.

The DUH published a personal letter from German Finance Minister Olaf Scholz to former US Treasury Secretary Steve Mnuchin during the later days of the Trump Administration.

“The German government is willing to massively increase its public support for the construction of LNG terminals along the German coastline by providing up to €1 billion ($1.21 billion)” … in return for the US allowing “unhindered construction and operation of Nord Stream 2,” DW reported, quoting from Scholz’s letter.

“Future legislation, which could be the basis for sanctioning Nord Stream 2, will either not be used or, in the case of compulsory sanctions provisions, blocked by waivers or other adequate and effective tools,” the letter continued.

Another NGO, Deutsche Umwelthilfe, has filed an administrative challenge to a federal permit for a final bit construction in German waters.