Race against time to complete controversial gas pipeline between Russia and Germany before US sanctions

Justin Huggler
Pioneering Spirit, the world's largest construction ship, has been deployed to lay the pipeline - REUTERS

A race against time is underway to complete a controversial gas pipeline between Germany and Russia before US sanctions approved this week can be imposed against it.

The world’s largest construction ship, the Pioneering Spirit, is currently laying the final offshore section of the Nord Stream 2 pipeline under the Baltic Sea.

But the Swiss company that owns the vessel could be forced to pull out of the project or face US sanctions within weeks.

Less than 100 miles of the pipeline remains to be laid under the Baltic Sea, and Gazprom, the Russian state energy company, says it will be finished in five weeks.

But in a move that threatens to strain relations between Germany and the US, the House of Representatives this week voted to impose sanctions against any company that takes part in its construction.

That has left Gazprom facing a race to complete the pipeline before the sanctions come into effect.

US lawmakers led by Senator Ted Cruz are forcing the sanctions through Congress after the Trump administration declined to impose any. President Trump says he will sign the law once it is passed.  

Senator Cruz and his allies accuse Russia of using Nord Stream 2 to weaken Ukraine’s economy by bypassing existing pipelines to western Europe that cross its territory.

And they warn the new pipeline will leave Germany and Europe dangerously dependent on Russia for their energy.

Senator Jeanne Shaheen, another of those behind the sanctions, said in a statement this week that they “send an unmistakable, bipartisan message from Congress to Vladimir Putin that the United States will not sit idly by while the Kremlin seeks to further spread its malign influence”.

Mr Trump, has been more conciliatory, telling reporters at this months' Nato summit: "That's a problem that Germany will have to solve for itself. Perhaps it will not be a problem for Germany. I hope it is not a problem."

The pipeline will double the capacity of gas Russia can pump directly to Germany Credit: TOBIAS SCHWARZ/AFP

Germany argues the pipeline is only one component of its energy strategy, and Angela Merkel’s government said this week that it “rejects extraterritorial sanctions that affect German and European businesses.”

German business leaders have called for the EU to impose counter-sanctions against the US.

The company most clearly in the crosshairs of the new sanctions is Switzerland’s Allseas SA, the owner of the Pioneering Spirit and a global leader in offshore construction.

Under the measures approved by the House of Representatives this week, its directors could be barred from entering the US and have any assets there frozen.

The law, which still has to be approved by the Senate, mandates the State Department to compile a report on companies involved within 60 days. Businesses would then have another 30 days to remove themselves from the project or face santions.

But the State Department has said it will issue a report within a week — meaning there could be a race to complete the pipeline before sanctions take effect.

The €9.5bn (£8bn) Nord Stream 2 pipeline will double the capacity of gas Russia can pump directly to Germany to 110bn cubic metres. 

Germany, which relies heavily on gas for heating but has no supplies of its own, is the world’s largest importer of natural gas. 

German businesses have accused the US of seeking to block the pipeline in a bid to force Berlin to buy more expensive American gas exports. 

“We should respond to sanctions that damage Europe with counter-sanctions,” Matthias Schepp of the German-Russian Chamber of Commerce said this week. “It is time for Berlin and Brussels to take a clear political position and respond with targeted countermeasures.

“Germany needs low energy prices in order to be able to compete worldwide with its energy-intensive industries.  The EU is clearly needs Russian gas less than Russia needs foreign exchange income.”