Robert HARNEIS -TDO- (FRANCE)- Allseas, the Dutch Swiss based subcontractor providing pipeline ships for Nord Stream 2, has withdrawn all its pipe laying vessels from the contract, as a result of American sanctions. President Trump signed the decree putting sanctions into effect on 20 December, Allseas withdrew from the contract the day before.Allseas and its employees were threatened with loss of visas to visit the US and confiscation of assets. In the circumstances they had no choice.
The company has issued the following press statement, ‘In anticipation of the enactment of the National Defense Authorization Act (NDAA), Allseas has suspended its Nord Stream 2 pipelay activities. 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.’ Instant obedience to US dictates is essential to the survival of the business, bearing in mind the failure of the EU to defend companies that are the victims of US sanctions moves.
However it will not be helpful to Allseas long term, as client countries and companies will take note and make sure in the future that they do not find themselves in the same situation as Gazprom today. It is significant the China brought a high tech pipelaying vessel into service for the first time in 2018.
Washington claims that Nord Stream 2 will make Europe too dependent on deliveries of Russian gas. At the same time the United States wants to sell its own more expensive LP gas to Europe. Gazprom already supplies 30% of the EU’s gas. They are building the undersea pipeline in partnership with the German companies Uniper and Wintershall, the Anglo Dutch company Royal Dutch Shell, and the Austrian OMV.
The pipeline was due to be completed at the end of 2019 and would have removed Russia’s reliance on Ukraine to get gas to Europe. But Ukraine relies financially on the considerable transit fees involved, €2.6 billion. The EU and the United States are already assisting a virtually bankrupt Ukraine to survive financially in its confrontation with the Russian supported breakaway provinces in the south east of the country, in the Donbass. The loss of these revenues would make things worse for Ukraine and therefore its western backers.
The pipeline has suffered from a campaign of harassment directed by the United States. First Denmark delayed the project as long as it legally could on specious environmental grounds. Poland has also started litigation against the project for equally questionablereasons. In the normal course of events the pipeline would have been finished by the end of the year. Gazprom has now said it will finish the contract on its own but as there a very few ships capable of laying the pipes it will now not be until the middle of 2020. Their own smaller pipe laying ship is in the Far East.
Allseas are the most advanced pipelaying company in the world and Gazprom was achieving laying rates of 15 kilometersper day. In the normal course of events the pipeline would have been finished on time by the end of the year. Delays will now occur whilst other less powerful vessels are assembled to finish the project. Gazprom will have been aware of the danger of US sanctions that have been threatened for some time and it Is unlikely that they do not have a ‘plan B’.
At the same time negotiations between Russia, Ukraine and the EU, regarding the renewal of the gas supply contract have just been successfully completed. Without the new pipeline Russia would have had difficulty satisfying its European clients and was presumably under pressure to come to an agreement with Ukraine. Apart from making president Trump look tough on Russia for electoral reasons, this may have been the principal object of imposing the sanctions that caused the delay. The United States is under no illusions that sooner or later the project will be completed.
Whatever the agreement that has been reached with Ukraine, Russia will take the long view and bidebuying it’s time. With the completion of Turkish stream and the eventual completion of North Stream 2 combined with the coming online of the Power of Siberia pipeline to China in the Far East, President Putin’s long held vision of having more than one main customer and no intermediate countries likely to hinder supply, will soon be realized. Russia is also investing heavily in LP gas that can be shipped by tankers.
Meanwhile there is a growing realization within the EU, particularly Germany, that this sort of economic aggression by a supposed ally is totally unacceptable and deeply damaging to the Union’s credibility.