US President Joe Biden's administration is set to recommend to Congress later this week that waivers be applied to the controversial Nord Stream 2 Russian gas pipeline project in the Baltic Sea, according to reports.
Nord Stream 2 has already been hit with sanctions from Washington, which has long threatened further measures, as the US views the Gazprom-led project as a threat to European energy security.
A host of Russian politicians, companies and individual remain under sanctions from the US and elsewhere over the 2014 annexation of the Crimean Peninsula from Ukraine.
Recent reports from two publications, Politico and Axios, quoting unnamed sources in the US administration, said that waivers from any new sanctions against the pipeline project have been suggested for the project’s operator and its chief executive, German national Matthias Warnig.
At the same time, the Biden’s administration is set to propose that Congress imposes sanctions against four vessels that have in the past three months been engaged in the construction of the remaining unbuilt segments of Nord Stream 2 in Danish and German waters.
One vessel in particular focus is the Russian-owned pipelayer Akademik Chersky, which last week picked up the construction of a second unbuilt offshore segment of Nord Stream 2 after more than a month of preparatory work.
“We continue to examine entities involved in potentially sanctionable activity and have made it clear that companies risk sanctions if they are involved in Nord Stream 2,” the US Department of State said.
Cheer in Moscow
However, suggestions of no further US action against eponymous operator Nord Stream 2 and Warnig have been interpreted in Moscow as confirmation that the US now sees no way of halting the laying of the pipe by the Akademik Chersky and another Russian pipelay barge, Fortuna.
The Fortuna is currently finishing the laying of first Nord Stream 2's first segment in Danish waters, close to the border with Germany, according to maritime traffic websites.
The barge is expected to cross the border before end of this month and continue the pipelay job in the German section to connect with the previously laid pipeline.
Completion of the two offshore segments will enable the operator to proceed into the next phase of the project to test the two legs of Nord Stream 2 and certify their safety.
Axios quoted sources close to the US administration as saying that officials have “determined that the only way to potentially stop the project is to sanction the German end users of the gas”.
However, this would be problematic as Germany is a core ally of the US in Europe.
Gloom in Kiev
Suggestions of Nord Stream 2 waivers will be of concern to authorities in Ukraine, which had hoped for a stronger US stance against the Russian project following the visit of US Secretary of State Anthony Blinken earlier this month.
Gazprom will be able to fully halt Russian gas transit flows to Europe across Ukraine once it obtains additional export capacity to the continent via Nord Stream 2.
Speaking in Kiev, Sergey Makogon head of Ukraine’s state gas pipeline player Operator GTS Ukrainy, said the country will forfeit direct annual revenues of $1.5 billion after Russia halts transit flows.
Makogon has estimated additional indirect annual costs of between $2 billion and $3 billion for the country’s industry and population due to an expected increase in the price of imported gas from Europe.