German Uniper admits failure of Nord Stream 2

Construction of the Nord Stream 2 pipeline, halted by U.S. sanctions, may no longer resume, and investments in the 10-billion-euro project may have to be completely written off, according to the IFRS report for the first half of 2020 by the German concern Uniper - one of the five European partners of Gazprom, which financed half of the cost of the project.

"Given the new U.S. sanctions, there is an increased risk that construction will be frozen or completely halted," the report said.

The company stresses that it does not intend to violate the sanctions and will "take all measures to comply with the requirements."

The failure of Nord Stream 2 is the main individual risk for the company, as in the event of a failure, the loan for the construction of the pipeline "may have to be written off," Uniper warns.

In July, Mike Pompeo, the head of the U.S. Department of State, demanded that the European companies "immediately withdraw" from the Nord Stream 2 project. At the end of the month, the U.S. Congress approved new sanctions that would affect companies providing technology, vessels and logistics support, as well as insurers working with Gazprom-chartered ships.

In early August, U.S. Senators Ted Cruz, Tom Cotton and Ron Johnson sent a letter to the management of the German port of Mukran, where the pipes for the construction of Nord Stream 2 are stored.

The port management company, Fährhafen Sassnitz GmbH, was warned of the threat of financial destruction if it "continues to provide goods, services and support" to the project in any form.

The Swiss company AllSeas, which owns the fastest pipe-laying ships in the world, received a similar letter in late December. Gazprom, which hastened to complete the construction before the end of the transit contract with Ukraine, leased AllSeas’ vessels.

After receiving the appeal of the senators, the Swiss company immediately withdrew its pipe-laying ships, forcing Russian officials to conclude a new deal with Kyiv.

Russia may use its own pipe-laying ships Akademik Chersky and Fortuna to continue work on Nord Stream 2. The first stands in the port of Mukran, where the pipes for Nord Stream 2 are stored, and the second - in the port of the German city of Rostock.

It is impossible to attract third-party companies to work on Gazprom’s Nord Stream 2 project. It is unlikely that anyone, for the sake of one contract will risk their international business.

However, Gazprom has nowhere to hurry: demand for gas in Europe has collapsed. And even the company does not fully use the existing export infrastructure.

  Nord Stream, Germany, Gazprom