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1 1 (May 28, 2020)

handle is hein.crs/govdary0001 and id is 1 raw text is: FF. ' iE SE .r, i , Updated May 28, 2020 Russia's Nord Stream 2 Pipeline: A Push for the Finish Line Recent reports suggest that the Russian government is trying to complete construction of Nord Stream 2, a controversial natural gas pipeline that will enable Russia to increase the amount of natural gas it exports directly to Germany and onward to other European Union (EU) member states (bypassing Ukraine and other transit countries). Pipeline construction was suspended in December 2019, after the United States imposed sanctions related to the project. The Trump Administration and Congress have expressed opposition to Nord Stream 2, reflecting concerns about European dependence on Russian energy and the threat Russia poses to Ukraine. In May 2020, a pipelaying vessel owned by a subsidiary of Russian state-owned energy company Gazprom arrived at Germany's Mukran port, a logistics hub for Nord Stream 2. Observers expect Gazprom to use that ship and a second pipelaying vessel to try to finish the pipeline. About 100 miles of the approximately 760-mile pipeline remain to be laid and connected (see Figure 1). Russian officials have said the pipeline could be completed by the end of 2020 or early 2021. Analysts note that even if Gazprom can finish construction of the pipeline, the company still would need to make significant changes to the ownership structure of the pipeline to comply with EU energy regulations. Nord Stream 2 is being constructed alongside the Nord Stream 1 pipeline, in operation since 2011. Nord Stream 1 has a total capacity of 55 billion cubic meters (BCM) per year. In 2018, it ran at 107% of stated capacity. Nord Stream 2 also has a capacity of 55 BCM per year, which will double the Nord Stream system's total capacity. Nord Stream 2 is estimated to cost about $10 billion. It is owned entirely by Gazprom. Half the cost is being financed by five European companies: Engie (France), OMV (Austria), Shell (Netherlands/UK), Uniper (Germany), and Wintershall (Germany). This ownership structure is different than that of Nord Stream 1, in which Gazprom has a 51% stake; four European companies Engie, Wintershall, E.ON (Germany), and Gasunie (Netherlands) own the rest. Support wnd Opposion Although the EU has articulated an ambitious energy diversification strategy, some European governments have not reduced dependence on Russian gas, which accounted for 46% of EU imports in 2018. Factors behind continued European reliance on Russian supply include possible rising demand for natural gas, diminishing European gas supply, financial investments by Russia in European infrastructure, and the perception of many Europeans that Russia remains a reliable supplier. Supporters of Nord Stream 2, including the German and Austrian governments, argue that the pipeline will enhance EU energy security by increasing the capacity of a direct and secure supply route at a time of rising European demand for gas. German officials and others have said that once the gas reaches Germany it could be transported throughout Europe. These advocates say they support developing additional infrastructure to ensure this is possible. The German government stresses that it also supports broader European energy supply diversification efforts, including by backing construction of new liquefied natural gas (LNG) terminals in northern Germany. Figure I. Nord Stream Gas Pipeline System UST LOGA ii f :: :::[ :x ,: ' N2 .G::: s p , ipeiines in Ortcm ..... ngoiri9 p ,v.t ts ' :: Source: Gazprom, edited by CRS. Opponents of the pipeline-including, among others, some EU officials, Poland, the Baltic states, Ukraine, the Trump Administration, and many Members of Congress argue that it will give Russia greater political and economic leverage over Germany and others that are dependent on Russian gas, leave some countries more vulnerable to supply cutoffs or price manipulation by Russia, and increase Ukraine's vulnerability to Russian aggression. Critics of Nord Stream 2 were initially hopeful that the European Commission (the EU's executive agency) would block the project by invoking EU regulations intended to prevent monopoly control of energy projects. In early 2019, the EU amended an existing gas directive to extend its rules to EU territorial waters. In May 2020, Germany's national energy regulator upheld the regulations, ruling that Gazprom could not own both the portion of the pipeline in German territorial waters and a majority of the gas flowing through it. Analysts speculate that Gazprom could seek to sell or transfer ownership of that portion of the pipeline in order to comply with the regulations. In recent years, Russia has sought to reduce the amount of natural gas it transits through Ukraine. Before Nord Stream gognpo goo , q g 'S a X

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