Russia Completes Nord Stream 2 Construction, Gas Flows Yet to Start

MOSCOW (Reuters) — Gazprom said on Friday it had finished construction of the Nord Stream 2 subsea pipeline to Germany, allowing Russia to potentially double lucrative gas exports to Europe via the Baltic Sea while bypassing and cutting off a source of income for political foe Ukraine.

Although gas flows have yet to be cleared by German regulators, the completion of the construction stage means Russia has successfully boosted its energy exporting capabilities towards Europe both from the north in the Baltic Sea and from the south in the Black Sea, where it operates the TurkStream pipeline.

"The head of the management board, Alexei Miller, told the morning meeting at Gazprom that the construction of Nord Stream 2 was fully completed today in the morning at 0845 Moscow time," Gazprom said.

Gazprom started construction of the 1,200-km long Nord Stream 2 pipeline from Russia to Germany five years ago. Progress of the $11 billion project stalled at the end of 2019 when then U.S. president Donald Trump imposed sanctions on it.

The construction restarted around a year later with the engagement of Russia's own vessels.

The route, jointly with the existing Nord Stream pipeline, will double the annual export capacity to 110 billion cubic meters, around half of Russia's total gas exports to Europe a year.

The project has drawn criticism from the United States and Ukraine among others. Washington says it will increase Europe's reliance on Russian energy supplies, while it is seeking to boost its own sales of sea-borne liquefied natural gas to Europe.

The United States has called its super-chilled gas exports to Europe a way to spread "molecules of freedom" across the Atlantic.

Gazprom is Europe's largest supplier of natural gas, accounting for more than a third of the region's gas market.

Russia said on Thursday pumping commercial gas supplies via Nord Stream 2 would not start until a German regulator gives the green light.

The Swiss-based Nord Stream 2 AG consortium said in a statement that it has completed welding of the pipeline with the help of Russian vessel Fortuna.

"The required pre-commissioning activities will be carried out with the goal to put the pipeline into operation before the end of this year," it said.


Gazprom's announcement on the construction completion was met with skepticism in Kyiv, which risks losing billions of dollars in gas transit fees if Moscow halts gas supplies via Ukraine.

Russia's current five-year gas transit deal with Ukraine expires after 2024. Russian President Vladimir Putin has said Ukraine must show good will if it wants Russian gas transit to Europe to continue.

"Constructed doesn't mean to put it on stream. And this won't happen until the pipeline is certified," Olha Belkova, a manager at Ukraine's gas pipelines operator, said in emailed comments to Reuters.

Carlos Torres Diaz, head of Power and Gas Markets at analysis firm Rystad Energy, also said it takes time for gas to flow via the pipes of Nord Stream 2. "There hasn't really been a reaction from the market so far so I guess this just also confirms expectations that no commercial deliveries are expected in the short term," he said.

The Kremlin said "everyone" was interested in Nord Stream 2 obtaining the necessary clearance for gas supplies.

Germany's energy regulator has to award an operating licence to Nord Stream 2, which must comply with European unbundling rules that require the owners of pipelines to be different from the suppliers of the gas that flows in them to ensure fair competition.

Gazprom's Western partners in the project are Germany's Uniper, BASF's Wintershall Dea, Anglo-Dutch oil major Shell, Austria's OMV and French energy company Engie.

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