Gazprom Attempts to Defy U.S. Sanctions
The struggle to stop Russia’s Nord Stream 2 natural gas pipeline did not end in December 2019, when the Switzerland-based Allseas Group S.A. suspended pipe-laying work in the Baltic Sea and recalled its ships under the threat of U.S. sanctions. Gazprom vowed to build the remaining part of the pipeline by itself, although so far Moscow does not possess the necessary pipe-laying capabilities. Russian attempts to defy U.S. sanctions and complete the project with inadequate equipment may actually endanger the safety and environment of the Baltic Sea.
If built, Nord Stream 2 would direct to Germany 70 percent of all Russian gas supplies to Europe, thus diverting almost all Russian natural gas transit from Ukraine directly to Western Europe. In the process, Central and Eastern European gas markets would be encircled by Russian pipelines from the east and the west and become inaccessible to alternative sources of gas supplies.
Gazprom has already started negotiations with the Danish Energy Agency to amend the construction permit issued to its subsidiary Nord Stream AD in October 2019. The gas company asks for permission to build the remaining 100 miles of pipeline with Russian equipment. But that task may not be easy to accomplish, as only a few companies in the world have the technology and capabilities to lay pipelines in deep-sea waters and none of them are Russian.
When the Danish Energy Agency issued its permit to the Nord Stream pipeline project in October, it clearly stated: “It is assumed that laying will be carried out using a lay vessel equipped with dynamic positioning (DP vessel).” At the time, Allseas Group S.A. was building the pipeline using one of the few unique pipe-laying vessels in the world, equipped with dynamic positioning and other advanced systems.
The U.S. sanctions target specific pipe-laying vessels needed for the construction of the Nord Stream 2 and TurkStream pipeline projects, along with foreign persons that have knowingly sold, leased, or provided those vessels. They came into effect on December 20, 2019 when President Trump signed the National Defense Authorization Act for FY 2020. The defense budget law incorporated almost fully a bipartisan bill, which Senators Ted Cruz (R) and Jeanne Shaheen (D) introduced in May 2019 under the title “Protecting Europe’s Energy Security Act of 2019.”
As soon as the sanctions were announced, Allseas Group S.A., hired by Gazprom to lay the Nord Stream 2 pipeline on the seabed of the Baltic Sea, ceased its operations in the Baltic Sea and stated that it would “proceed, consistent with the legislation’s wind down provision.” The multi-national company did not wait for the 60-day warning period envisioned in the law, thereby making sure to protect its interests in the United States and its standing in the global financial system.
The Kremlin immediately announced it would complete the pipeline using the Russian ship Akademik Chersky, although it would have to be reconfigured for operations in the Baltic Sea first, according to Russian energy minister Aleksandr Novak. But even though that ship is equipped with a dynamic positioning system, as required by the Danish authorities, its overhaul will take time. In addition, its insurers may come under sanctions for enabling the vessel to build Nord Stream 2. As another option, Gazprom is proposing to attach a pipe-laying barge to a ship with dynamic positioning to complete the job quickly and supposedly have the pipeline operational by the fall. And this is where Gazprom’s problem begins.
Avoiding anchors in the Baltic Sea is a key environmental and security requirement for drilling platforms, research ships, and cable-laying and pipe-laying vessels. Dynamic positioning is a computer-controlled system that automatically maintains the vessel’s position and heading, without the need to use anchors to maintain its course in deep waters. A pipe-laying barge does not have such capabilities and will have to use anchors in deep waters. Such an option is unacceptable for littoral states, because the Baltic Sea’s deep waters are a graveyard of considerable chemical and conventional ammunitions dumped there after World War II. Given Russia’s record of maritime disasters in the Barents and White Seas, inviting another potential environmental catastrophe in the Baltic Sea involving those chemical munitions and explosives is not in the interest of any European state. The proposed Russian equipment could not only compromise existing maritime environmental protections, but also trigger explosions of WWII chemical and conventional ammunition depots still in the Baltic Sea. One of the largest dumping sites of chemical warfare agents—including sunken boats loaded with chemical munitions and bombs containing mustard gas—is located east of the Danish Bornholm Island. The area was under control of the Soviet Union at the time. Ironically, Moscow’s Nord Stream 2 pipeline is supposed to pass near that area now.
Protecting the ecology of the Baltic Sea was one of the main reasons Denmark took more than two years to issue a construction permit for Gazprom’s subsidiary Nord Stream AD. Other reasons included Denmark’s national security concerns and the protection of Europe’s energy security. Denmark’s delays in approving the construction permit gave the U.S. Congress time to pass the sanctions bill that stopped work on Nord Stream 2. Copenhagen is currently under significant pressure from Moscow and Berlin to allow for the completion of the pipeline. U.S. policymakers should support and encourage Denmark in resisting such pressure so that efforts to stop Nord Stream 2 are not in vain.
February 19, 2020