The Nord Stream 2 pipeline is now all but certain to be completed. The only question is how long it will take.
A decision Wednesday by Denmark to allow the contentious pipeline to cross its waters removed the final administrative hurdle to the construction of the Russia-led project.
The European Commission, along with Central Eastern European countries vehemently opposed to the project, accepted some time ago they had no legal grounds to stop Nord Stream 2’s construction. But while Danish approval was ultimately expected, the convoluted and years-long permit granting process threw the project’s timeline into uncertainty.
Wednesday’s approval is cause for celebration for both Moscow and the company behind the project, as well as the pipeline’s backers in Europe. But its timing is also expected to delay completion of the pipeline well into next year or even longer, as the window of opportunity for construction closes for the winter season.
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Germany applauded the decision. “With this last permit @NordStream2 can finally move forward,” tweeted Miguel Berger, director general for economic affairs at the German Federal Foreign Office.
Russia’s Gazprom is the sole shareholder of the project but has financial backing from five West European companies.
“It would not be possible to complete [the pipeline] by 2019,” said Mateusz Kubiak, an oil and gas analyst with the Warsaw-based consulting firm Esperis.
Nord Stream 2 is meant to ship 55 billion cubic meters of gas a year through a 1,200-kilometre-long pipeline from Russia to Germany via the Baltic Sea, doubling the existing route capacity. About 87 percent of the pipes have been laid in German, Finnish, Swedish and Russian waters, the company said.
Russia’s Gazprom is the sole shareholder of the project but has financial backing from five West European companies — Austria’s OMV, Anglo-Dutch Shell, France’s Engie and Germany’s Uniper and Wintershall. Italy’s Saipem and Swiss-based Allseas are helping with pipe laying.
Proponents, which include Germany, the Netherlands and Austria, say the project makes economic sense and the EU will need the gas.
Portions of pipe lie along the construction route of the Eugal gas pipeline on March 26, 2019 near Pasewalk, Germany | Sean Gallup/Getty Images
But its construction has come under fire from the U.S. and many Central and Eastern European countries, worried the pipeline will boost the Kremlin’s influence and allow Russia to end gas transit via cash-strapped Ukraine.
The construction permit received from the Danish Energy Agency Wednesday is a victory for Nord Stream 2, which had grown increasingly frustrated over the process.
“We are pleased to have obtained Denmark’s consent to construct the Nord Stream 2 Pipeline through the Danish continental shelf area,” Samira Kiefer Andersson, the company’s permitting manager, said in a statement.
The agency approved the company’s third requested route application, which would see the pipeline going southeast of Denmark’s Bornholm island in the Baltic Sea.
Documents the company submitted as part of its last application show the project could face at least a six-month delay under that route proposal. It’s also expected to cost an extra €660 million on top of the original budget of €9.5 billion.
Sebastian Sass, EU representative for Nord Stream 2, said the construction of the pipeline in Danish waters will start in “due time.”
"Therefore, the window closes by tomorrow and Nord Stream wouldn’t be able to do that until mid-May 2020" — Mateusz Kubiak, analyst with consulting firm Esperis
“The actual start of construction depends on a number of legal, technical and environmental factors. This will take a few weeks,” he said. The company’s goal, he added, is to complete the project “in the coming months.”
Seasonal issues
After the Danish section is completed, the laid pipelines have to be connected to the German sections through a special procedure. That can only happen between mid-May and the end of October, according to the permit from German authorities, due to environmental concerns.
"Therefore, the window closes by tomorrow and Nord Stream wouldn’t be able to do that until mid-May 2020," Kubiak said.
The permit granted Wednesday was Nord Stream 2’s third attempt at getting approval for a route through Danish waters, after it submitted a new application in April at the request of the country’s energy regulator.
It already had an application pending for a route through Denmark’s exclusive economic zone northwest of Bornholm island, on which the regulator has not yet ruled. In June, the company withdrew its 2017 original route application through Denmark’s territorial waters, which the foreign minister could have vetoed based on foreign and security concerns.
When it submitted the third application, Nord Stream 2 said the regulator’s request “can only be seen as a deliberate attempt to delay the project’s completion.”
“With Ukraine policy having recently entered the domestic U.S. arena, there probably is not much appetite in Congress to engage in a policy related to the Ukrainian gas sector” — Brenda Shaffer, Georgetown University adjunct professor
Danish Climate and Energy Minister Dan Jørgensen in August pushed back against those accusations in an interview, saying "we are not deliberately delaying anything.”
A further complication could come from the United States, where lawmakers have mulled sanctions against companies helping with Nord Stream 2’s construction.
Kubiak confirmed successful sanctions would cause further delays, potentially leaving Russian companies to complete the project.
However, a sanctions bill submitted by U.S. Republican Senator Ted Cruz is languishing in the Senate after gaining bipartisan support in committees. A similar bill in the House of Representatives has been stuck in committee for months. Asked whether time was running out for the U.S. to pass sanctions, Cruz merely responded “Yes.”
Brenda Shaffer, adjunct professor at Georgetown University’s Center for Eurasian, Russian and East European Studies, said the prospect of sanctions is becoming more distant — particularly given the pipeline’s Ukraine connections.
“With Ukraine policy having recently entered the domestic U.S. arena, there probably is not much appetite in Congress to engage in a policy related to the Ukrainian gas sector,” she said, referring to the current impeachment procedures against U.S. President Donald Trump.
Anthony Adragna and Ben Lefebvre contributed reporting.
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