Nord Stream 2 Set to Finish Bulk of Work on One Line in June

(Bloomberg) -- Nord Stream 2 AG plans to complete major construction work on one of two branches of the controversial Russian gas link in the first half of 2021, despite U.S. sanctions that have threatened its completion for over a year.

The section of pipe could be largely finished as soon as June, as the operator of Nord Stream 2 starts some testing in Danish waters on Friday, according to a schedule seen by Bloomberg that was confirmed by people familiar with the process.

Construction of the 1,230-kilometer (764-mile) gas pipeline that will deliver Russia’s natural gas to Germany was halted after U.S. sanctions in December 2019, when all but 160 kilometers of the link had been put in place. The U.S. -- which has tightened restrictions -- maintains that the gas link, owned by a unit of Gazprom PJSC, gives Moscow too much leverage over Europe.

Construction of a 2.6-kilometer section in German waters resumed and was finished last month amid risks of tighter U.S. restrictions.

Recovery of the already laid pipes in Danish waters will start in the second half of January and the new laying operation there will start around the same time, according to the schedule.

The pipelaying vessel Fortuna is expected to complete works in Danish seas by the middle of the last week of May, and then start in German waters with construction going through to June, according to the document.

While the assumed speed of Fortuna’s pipelaying is 0.4 kilometers per day, completing the first line may take longer as it depends on the results of a drilling survey and weather conditions.

Germany’s Maritime and Hydrographic Agency is still evaluating the request of Nord Stream 2 to move forward with works in German waters, according to a spokeswoman. The Danish and German regulators declined to comment on the schedule. Nord Stream 2 didn’t immediately respond to Bloomberg requests for comments.

Hurdles Ahead

This schedule “is no guarantee” that one of the Nord Stream 2 lines will come online in the second half of 2021, according to Mateusz Kubiak, a senior analyst at Warsaw-based energy consultancy Esperis.

“We first need to see if the pipeline can actually be constructed,” he said, citing challenging weather conditions and U.S. restrictions as some key hurdles to the project. “The second issue is commissioning and certification of the link, it’s still unclear if Nord Stream 2 has prepared an alternative plan for that,” Kubiak said.

Earlier this month Norway’s Det Norske Veritas Holdings AS, started a plan to wind down its verification support of Nord Stream 2 after the U.S. added more sanctions targeting the 9.5-billion euro ($11.5 billion) project.

One Line So Far

It remains unclear when Nord Stream 2 AG plans to construct the second line of the twin gas link, set to run in parallel to the first one with the same capacity.

“My view is that Nord Stream 2 is now focusing on completing only one of the two strings, and the reason might be that another vessel, Akademik Cherskiy, is still not ready to be deployed,” Kubiak said.

The Akademik Cherskiy, which was named as a potential vessel to complete construction of the pipeline, is currently near the Kaliningrad port in Russia, Bloomberg ship-tracking data show.

(Updates with analyst’s comment starting ninth paragraph.)