Russian Pipelayer Arrives at Staging Point for Nord Stream 2 Project

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After a long journey, the Russian pipelayer Akademik Cherskiy has arrived at the Baltic Sea port of Mukran. The Cherskiy is a potential replacement for the mega-pipelayers Solitaire and Pioneering Spirit, which were forced to depart Gazprom’s landmark Nord Stream 2 pipeline project due to American sanctions. Cherskiy’s movements have been closely watched by commodities analysts and policymakers, as the 55 bcm-per-year twin pipeline has the potential to reshape Northern Europe’s gas market. 

Many American political leaders view Nord Stream 2 as a means for Russia to monopolize Northern Europe’s gas supply – and therefore, a potential strategic threat. The line would allow Gazprom to route gas shipments around the Ukrainian pipeline network, depriving Ukraine of revenue during its protracted conflict with Russia. 

The enacted version of the U.S. defense funding bill for 2020 requires the U.S. Treasury to identify and sanction the leaders of any firm providing pipelay vessels for Nord Stream 2. The provision applied almost exclusively to leading pipelay company Allseas, the operator of Solitaire and Pioneering Spirit, and the company withdrew its assets from the project in late December in order to avoid sanctions.

In order to complete the final 100-mile stretch of Nord Stream 2, Russia effectively needs to use its own vessels. The Russian pipelay barge Fortuna is capable of handling pipe of the requisite size, but it is not DP-enabled – a requirement for work in Danish waters. Akademik Cherskiy has a DP system, but she was not immediately available: she had to reposition from the Russian Far East, a multi-month journey across the Indian Ocean and around the Cape of Good Hope (not the Suez Canal). She has now arrived at Mukran, a port facility on the island of Rugen, Germany. Her purpose has not been disclosed, but Mukran is the storage site for the remaining pipe for Nord Stream 2. 

Even with a pipelay vessel secured, the project faces a new hurdle: Handelsblatt reports that German regulators are planning to apply the EU Gas Directive to Nord Stream 2, which would prohibit Gazprom from having exclusive use of the pipeline. The directive provides for ownership unbundling, third-party access, non-discriminatory tariffs and new transparency requirements.