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Nord Stream 2 pipelayer Allseas suspends operations on US sanctions

Highlights

Swiss company had been laying pipe in Danish waters

Pioneering Spirit, Solitaire were moving along pipe route

US President Trump signed military bill into law Friday

London — Switzerland-based Allseas -- which has been integral to laying the controversial Nord Stream 2 gas pipeline from Russia to Germany -- has suspended pipelaying activity after US President Donald Trump signed new sanctions into law late Friday, the company said Saturday.

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The move by Allseas will certainly mean new delays to the completion of the 55 Bcm/year pipeline, which had originally been scheduled to start operations at the end of 2019.

"In anticipation of the enactment of the National Defense Authorization Act (NDAA), Allseas has suspended its Nord Stream 2 pipelay activities," the company said in a brief statement.

"Allseas will proceed, consistent with the legislation's wind down provision and expect guidance comprising of the necessary regulatory, technical and environmental clarifications from the relevant US authority," it said.

The new sanctions language against Nord Stream 2 is part of the NDAA, which had already been approved by the House of Representatives and the Senate.

It calls for the US State and Treasury departments to submit a report within 60 days that identifies "vessels that engaged in pipe-laying at depths of 100 feet or more below sea level for the construction of the Nord Stream 2 pipeline project, the TurkStream pipeline project or any project that is a successor to either such project." Those ships and identified executives involved with those ships could then face sanctions.

According to cFlow, S&P Global Platts trade flow software, two Switzerland-based Allseas pipelaying ships have been moving in a northeast-southwest direction off the Danish island of Bornholm in the Baltic Sea.

The Pioneering Spirit began laying the Danish part of Nord Stream 2 around November 28 and has tracked some 60% of its route to the border with Germany's Exclusive Economic Zone, according to Platts cFlow.

The Solitaire is around four days behind the Pioneering Spirit, according to cFlow.

REPLACEMENT VESSELS

According to S&P Global Platts Analytics, Nord Stream 2 would have to seek alternative vessels and contractors to complete the remaining section of pipe in Danish waters if the sanctions are enacted.

"While the most challenging parts of Nord Stream 2 have been laid in water depths of around 200 meters, the remaining section in Danish waters at 90 meters depth remains complicated," it said.

Russian companies operate capable offshore pipe-lay vessels, which have completed projects in challenging Arctic conditions, including the MRTS Defender, which worked on the offshore stretch of the Bovanenkovo-Ukhta pipeline.

Platts Analytics believes MRTS Fortuna could be used to complete Nord Stream 2, but is capable of laying just 1 km/d.

A further obstacle, according to Platts Analytics, is that the Danish permit application states that it is assumed that the vessels used to complete the Danish section will have dynamic positioning capabilities (such as those of the Allseas vessels) which are not present on MRTS Fortuna.

A Russian pipelaying vessel that already has dynamic positioning capabilities, Akademik Cherskiy, could be used, but it would take up to two months to arrive to Danish waters as it is currently stationed in Russia's Far East.

-- Stuart Elliott, Stuart.Elliott@spglobal.com

-- Edited by James Leech, newsdesk@spglobal.com