New us sanctions against Nord stream 2 threaten not only Gazprom but also directly European companies. This is an unprecedented unfriendly action against a European ally that could lead to a trade and economic war with the United States. Will European elites have the resolve to stand up to Washington, or will Gazprom have to fight alone?
If Russia tries to complete the construction of the remaining kilometers of the gas pipeline, the House of Representatives and the Senate are ready to pass a new sanctions law. The sanctions will target European investors who participate in the project, as well as companies that will buy gas going through the pipeline, German Handelsblatt reported, citing American diplomatic sources. They assure that the sanctions will be imposed in February or March.
Who is at risk of being affected by new us sanctions if they are imposed?
Gazprom and its five European partners, which have invested in the construction of Nord Stream 2, are under threat in the first place. The project was estimated at 9.5 billion euros, of which one half was financed by Gazprom and the other by European companies. These are French Engie, Austrian OMV, British Shell and German companies Uniper and Wintershall.
According to Gazprom, by October 2019, foreign partners had financed the construction operator Nord Stream 2 AG for 4,024 billion euros. Including 2.164 billion euros provided for the period up to 2019, 1.859 billion euros-up to 2025.
Thus, the Austrian OMV last year invested 2,113 million euros in the Nord Stream project, including 25 million euros in the fourth quarter of 2019.
“The European partners have already paid all the funds, but if they are forced to withdraw from the project due to sanctions, they can demand a refund on the basis that the gas pipeline was not built on time. There is a risk of this situation developing, ” Deputy chief Director for energy at the Institute of energy and Finance.
“Gazprom will have additional problems finding financial resources. This is not some crazy means for Gazprom within the scope of its activities, but it is a significant economic problem,” he adds.
However, the leading expert of the national energy security Fund, Igor Yushkov, believes that the Europeans will not be fined for investing in the project retroactively, because all the funds have long been made, and Gazprom will finish building the pipe at the expense of money from its own pocket.
“European investment is still being received for the construction of the land extension of the Nord stream 2 – the Eugal gas pipeline, but it is not directly the Nord stream 2. It is impossible to find the Europeans for the fact that they are, in fact, expanding their gas transportation system,” the expert believes. The investment clause in the sanctions maybe for the sake of a tick, as it was in the case of sanctions against owners of pipe-laying vessels. “The December sanctions applied to both Nord Stream 2 and Turkish Stream, but everyone knew that the Turkish stream was already built and these sanctions would not affect it in any way, but they also added It to the list. The same may be true for investments that European companies have already made, ” Yushkov does not exclude.
But Gazprom, which will Finance the completion of the gas pipeline, is under attack. However, it is already at risk of being subject to sanctions that were already imposed in December. “Gazprom’s division, which will complete the pipeline, may be subject to sanctions. Until now, Gazprom has not been subject to any direct restrictions,” Yushkov says.
The second part of the possible sanctions is aimed at buyers of gas that will go along the “North stream-2”. In other words, the United States admits that Gazprom is able to complete the gas pipeline, and therefore thought about sanctions after it works.
“What will the Americans fine European buyers for? It turns out that they basically buy gas from Gazprom, the “wrong” supplier. In fact, the US prohibits Europeans from buying Russian gas and indicates that the fuel should be purchased from a NATO partner. If this is true, then
the format of our sanctions is approaching the format of sanctions against Iran when it was forbidden to buy Iranian oil»,
– Igor Yushkov believes.
The new sanctions will hit all European companies that buy gas from Gazprom. 55 billion cubic meters of gas should be pumped through Nord stream 2. It turns out that the Americans are blocking the Europeans ‘ access to these billions. At the same time, Gazprom supplies 200 billion cubic meters of blue fuel to Europe, meaning the US wants to deprive Russia of the ability to sell a quarter of all gas imports to the EU. We can talk about depriving Gazprom of export revenue of 7-11 billion dollars at the price of a thousand cubic meters of 126-200 dollars.
However, Igor Yushkov believes that it will be very difficult for the US to prove that a particular European company bought gas from the “wrong” Russian pipe. Because Nord stream 2 is not the only route for delivering Russian gas to European consumers. “It will not be easy to track where the European consumer got gas from. The contract with Gazprom usually specifies only the point of delivery and acceptance of gas – for example, in the Austrian hub of Baumgarten. Ownership passes from Gazprom to the buyer here. The question of gas delivery does not concern the buyer at all. Therefore, the big question is how the Americans will prove that this or that European received this gas from Nord Stream 2, ” the source notes. Russian gas comes to Baumgarten in various ways, including from Nord stream 1 and its extension Opal, as well as through transit from Ukraine.
Belogoryev admits that Europeans will have to buy Russian gas through intermediary companies to avoid being subject to restrictions.
Another thing is that the Europeans ‘ fear of American sanctions may play against Russia. “We should be afraid of the unsuccessful experience of the Europeans in creating a mechanism to circumvent sanctions when buying oil from Iran. The Europeans were unable to do anything against us ban. Both the idea of creating a mechanism for alternative accounts and the idea of moving away from the dollar failed. In fact, no European company buys oil from Iran. They fully comply with our sanctions, ” says the expert of the Federal security service.
“The most dangerous thing is that our sanctions may apply to all consumers of Russian gas in Europe, and Washington will start distributing rights to use Russian supplies»,
says a leading analyst “Discovery Broker” Andrei Kochetkov.
“These are exorbitant steps. This is a very serious interference in the economic activity of the European market,
However, this situation can also play into the hands of Russia, does not exclude Kochetkov: “Irritated Europe is quite capable of starting the process of abandoning the sanctions policy against Moscow.”
“However, we cannot be sure that European countries will find the determination to resist this kind of pressure. If we assume that the European elite has the strength to resist, this will lead to a trade and economic war with the United States. This is a very serious issue,
If the new us sanctions against Nord Stream 2 are adopted, it will put the European Union before a serious choice. Brussels can stand up for its sovereignty and security, which will entail a fight with an extremely strong partner – the United States. Or it will lose some of its freedom, and instead of inexpensive Russian gas will buy American LNG. The economic consequences for industry and the economy of not only Germany but the entire EU could be disastrous. The cost of production of goods and services in the EU will increase, and it will become more difficult for European companies to compete in the global market. The US will not only get a market for its LNG but also take a share of the Europeans on the world stage.
The reaction from Germany is restrained, but unambiguous. German authorities reject any extraterritorial restrictions, the German Foreign Ministry said.
The very fact that sanctions were adopted remains in question. Will Washington decide to take such an unfriendly step against its NATO partner, the European Union? In the US Senate, there is no confidence in the conduct of new sanctions, as stated by the democratic Senator, a member of the Committee on Foreign Affairs Ben Cardin.
“It seems to me that this is not a realistic option for sanctions. Because this is already such a clear attempt by the Americans to regulate the EU’s internal market. It is difficult to imagine that the EU would tolerate this kind of behavior by the US, ”
“It is difficult to say whether the US is capable of such blatant blackmail of Europeans. Previous attempts to impose sanctions on Gazprom in the form of a separate bill have failed. It was only within the framework of the package agreement on the defense budget that the construction of Nord Stream 2 was partially hindered. Therefore, the prospects for new initiatives do not seem so high, ” Kochetkov agrees.
On the other hand, the United States is entering the hottest period of the election campaign, and there are already accusations that Russia is interfering in the democratic processes. “We can assume the next use of the Russian theme in the fight for the presidency and votes in Congress»,