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Nord Stream 2 gas pipeline could be delayed to Q1 2021: Putin

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Nord Stream 2 gas pipeline could be delayed to Q1 2021: Putin

Highlights

Just 160 km left of controversial pipeline to lay

No need for foreign partners to complete project

Link will double Nord Stream corridor capacity

  • Author
  • Stuart Elliott    Rosemary Griffin
  • Editor
  • Alisdair Bowles
  • Commodity
  • Natural Gas

London — The 55 Bcm/year Nord Stream 2 gas pipeline from Russia to Germany may only begin operations in the first quarter of 2021, Russian President Vladimir Putin said at the weekend, signaling a possible further delay to the controversial project.

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Speaking at a press conference alongside German Chancellor Angela Merkel in Moscow on Saturday, Putin said that the project would, however, be completed without the need for international assistance.

"Completion of the construction [of Nord Stream 2] will be delayed by several months," Putin said at the press conference, posted to the Kremlin website.

"But I hope that by the end of this year, or in the first quarter of next year, work will be completed and the pipeline will begin to work," he said.

Previously, Russian energy minister Alexander Novak said Nord Stream 2 would be operational by the end of 2020.

REMAINING KILOMETERS

Just 160 km of the total length of the 2,460 km two-string line is left to lay after contractor Allseas halted pipe-laying work due to US sanctions signed into law in mid-December threatening measures against companies helping to build the project.

Russia is expected to fit out an existing vessel of its own -- the Akademik Cherskiy -- to lay the final kilometers of the Nord Stream 2 pipeline.

"We will undoubtedly be able to complete it on our own, without bringing in foreign partners," Putin said. "The question is timing. This is the only question that comes up on this."

Nord Stream 2 -- which has been criticized by the European Commission, the US and countries in eastern Europe for focusing too much European gas import capacity on one route and one source --- will double the Russia-Germany subsea gas export corridor to 110 Bcm/year.

UKRAINE TRANSIT

Nord Stream 2 was originally expected to come online by the end of 2019 to coincide with the end of Gazprom's 10-year gas transit agreement with Ukraine's Naftogaz.

If the authorities in Denmark had not waited until the end of October last year to award a permit for construction of Nord Stream 2 in its waters, the pipeline would likely already be completed and gas already flowing.

That would have given Moscow considerably more leverage in its negotiations with Ukraine over a new gas transit deal too.

But with Nord Stream 2 delayed, Russia agreed to a new five-year gas transit deal with Ukraine late last month.

Under the deal, Gazprom has agreed to transit 65 Bcm of Russian gas via Ukraine to Europe this year.

"Postponing the commissioning of Nord Stream 2 is unlikely to affect Gazprom's exports in 2020, given that the company signed a new gas transit contract with Ukraine," analysts at VTB Capital said Monday.

"We calculate that Gazprom might have to supply some 75 Bcm through Ukraine in 2020 in the absence of the Nord Stream 2 pipeline," they said.