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Norway-based DNV GL halts Nord Stream 2 certification work on US sanctions

Highlights

Had been engaged to verify technical integrity

Follows US approval of NDAA/PEESCA by congress

Latest setback for almost-complete pipeline

London — Norway-based quality assurance company DNV GL will no longer provide pipeline integrity verification services for the almost-complete Nord Stream 2 gas pipeline project due to the threat of US sanctions, a DNV GL spokesman said Jan. 4.

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It is the latest setback for Nord Stream 2, which had engaged DNV GL to verify the safety and technical integrity of the pipeline system once completed.

The US Senate on Jan. 1 voted to override President Donald Trump's veto of the US National Defense Authorization Act (NDAA) which includes new provisions related to Nord Stream 2 under the Protecting Europe's Energy Security Clarification Act (PEESCA).

These expand the threat of US sanctions against companies that provide services to vessels laying the Nord Stream 2 pipe and companies that carry out pipeline testing, inspection or certification activities.

"DNV GL will cease all verification activities for the Nord Stream 2 pipeline system in line with sanctions and while sanctions are in place," a DNV GL spokesman told S&P Global Platts.

"We are implementing a plan to wind down our verification support to the project. As the situation currently stands, DNV GL cannot issue a certificate upon the completion of the pipeline," he said.

Danish permit

DNV GL had been engaged to verify the safety and technical integrity of the Nord Stream 2 pipeline system, and to issue a certificate of compliance upon the "satisfactory completion" of the project in accordance with its independent technical Standard DNVGL-OS-F101, the spokesman said.

It is also stipulated in the Danish permit for pipelaying that DNV GL would be the company to issue a certificate of conformity for Nord Stream 2 in Danish waters.

The Nord Stream 2 operating company -- which declined to comment Jan. 4 -- could try to engage a different company to carry out the certification work, but it may need to apply for an updated Danish permit to change the certifying entity.

In that case, it could mean a delay to the completion of the project.

A little over 150 km of Nord Stream 2 remains to be laid in Danish and German waters, but the threat of US sanctions against companies involved in laying the pipeline has led to long delays in its completion.

Nord Stream 2 is crucial to Russia's plans to scale down utilization of the Ukrainian transit corridor for its gas supplies to Europe and without it, Gazprom is going to need more Ukrainian transit capacity -- which comes at a cost.

Danish notice

Work is expected to resume to lay the pipeline in Danish waters on Jan. 15 using the Fortuna pipelaying vessel, according to a notice to sea-farers published Dec. 22 by the the Danish Maritime Authority.

According to S&P Global Platts Analytics, the construction work on the remaining 150 km is likely to take at least 3.5 months with commissioning and testing work expected to take another 1-2 months.

This has resulted in Platts Analytics pushing back its Nord Stream 2 start-up assumption from the start of Q2 2021 to Q3 2021.

"Once ready, we expect a gradual ramp-up of the pipeline, which will take until the end of 2021, with only 47 million cu m/d of flows in Q3 2021 and 110 million cu m/d in Q4 2021," it said in a note Dec. 31.

The Fortuna in mid-December already laid a small 2.6 km stretch of the 55 Bcm/year link in German waters -- the first work on laying the pipeline since December 2019.

The DMA notice said the Fortuna would lay the two-string pipeline sections and be accompanied by the construction vessels Baltic Explorer and Murman.

As well as laying the short German section, the Fortuna had already been used before to lay part of Nord Stream 2 in Russian waters.

It is a vessel that uses anchors, unlike Russia's Akademik Cherskiy pipelayer, which has dynamic positioning capabilities.

Vessels using anchors are typically slower at laying pipe than those with dynamic positioning capabilities.