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Updated September 28, 2020
Russia’s Nord Stream 2 Pipeline: Running in Place
In 2020, uncertainty has clouded the future of Nord Stream
throughout Europe. These advocates say they support
2, a controversial natural gas pipeline that would increase
developing additional infrastructure to ensure this is
the amount of Russian natural gas exported directly to
possible. The German government stresses that it also
Germany and on to other European Union (EU) member
supports broader European energy supply diversification
states, bypassing Ukraine and other transit states (Figure
efforts, including by backing construction of new liquefied
1). Pipeline construction was suspended in December 2019,
natural gas (LNG) terminals in northern Germany.
after the passage of U.S. legislation establishing sanctions
related to the pipeline. The Trump Administration and
Figure 1. Nord Stream Gas Pipeline System
Congress have expressed opposition to Nord Stream 2,
reflecting concerns about European dependence on Russian
energy and the threat Russia poses to Ukraine.
About 100 miles of the approximately 760-mile pipeline
remain to be laid and connected. After several months of
delay, in May 2020 a Russian pipelaying vessel arrived at
Germany’s Mukran port, a logistics hub for Nord Stream 2.
Observers have expected the Russian state-owned company
Gazprom to use that ship—which until recently was owned
by a subsidiary—and a second vessel to try to finish the
pipeline. Russian officials have said the pipeline could be
completed by the end of 2020 or early 2021.

Source: Gazprom, edited by CRS.
Nord Stream 2 is being constructed alongside the Nord
Stream 1 pipeline, in operation since 2011. If completed,
Opponents of the pipeline—including, among others, some
Nord Stream 2 would double the total capacity of the
EU officials, Poland, the Baltic states, Ukraine, the Trump
system, from 55 billion cubic meters (BCM) to 110 BCM
Administration, and many Members of Congress—argue
per year. Nord Stream 2 is estimated to cost about $10
that it will give Russia greater political and economic
billion. It is owned entirely by Gazprom. Half the cost is
leverage over Germany and others that are dependent on
being financed by five European companies: Engie
Russian gas, leave some countries more vulnerable to
(France), OMV (Austria), Shell (Netherlands/UK), Uniper
supply cutoffs or price manipulation by Russia, and
(Germany), and Wintershall (Germany). This ownership
increase Ukraine’s vulnerability to Russian aggression.
structure differs from Nord Stream 1, in which Gazprom
has a 51% stake and four European companies—Engie,
Critics of Nord Stream 2 were initially hopeful that the
Wintershall, E.ON (Germany), and Gasunie
European Commission (the EU’s executive agency) would
(Netherlands)—own the rest.
block the project by invoking EU regulations intended to
prevent monopoly control of energy projects. In May 2020,
Support and Opposition
Germany’s national energy regulator affirmed that
Although the EU has articulated an ambitious energy
Gazprom could not own both the portion of the pipeline in
diversification strategy, some European governments have
German territorial waters and a majority of the gas flowing
not reduced dependence on Russian gas, which accounted
through it. Analysts speculate, however, that Gazprom
for 47% of EU imports in 2019. Factors behind continued
could seek to sell or transfer ownership of that portion of
European reliance on Russian supply include possible rising
the pipeline in order to comply with the regulations.
demand for natural gas, diminishing European gas supply,
financial investments by Russia in European infrastructure,
More recently, pipeline opponents, including within
and the perception of many Europeans that Russia remains
Germany, have argued that the German government should
a reliable supplier.
block the pipeline in response to malign Russian activity,
including an alleged chemical nerve agent attack against
Supporters of Nord Stream 2, including the German and
Russian political opposition figure and anticorruption
Austrian governments, argue that the pipeline will enhance
activist Alexei Navalny. Although German political leaders
EU energy security by increasing the capacity of a direct
have uniformly condemned the attack, Chancellor Angela
and secure supply route at a time of rising European
Merkel and others continue to argue that the infrastructure
demand for gas. German officials and others have said that
project should be “decoupled” from ongoing political
once the gas reaches Germany it could be transported
disputes with Russia.

Russia’s Nord Stream 2 Pipeline: Running in Place
Impact on Ukraine
safeguards have been put in place” to minimize Russia’s
In recent years, Russia has sought to reduce the amount of
ability to use the sanctioned pipeline project “as a tool of
natural gas it transits through Ukraine. Before Nord Stream
coercion and political leverage,” and to ensure “that the
1 opened in 2011, about 80% of Russia’s natural gas
project would not result in a decrease of more than 25
exports to Europe transited Ukraine. In 2018, around 40%
percent in the volume of Russian energy exports transiting
of these exports transited Ukraine, and Ukrainian revenues
through existing pipelines in other countries, particularly
from gas transit totaled $2.65 billion.
Ukraine, relative to the average monthly volume of Russian
energy exports transiting through such pipelines in 2018.”
In December 2019, after the United States established
sanctions related to construction of Nord Stream 2,
On December 21, 2019, Allseas, the Swiss-Dutch company
Gazprom and the Ukrainian state-owned energy company
laying the Nord Stream 2 pipeline, stated that it had
Naftogaz concluded a renewal contract for the transit of
suspended its activities. On December 27, 2019, the State
Russian natural gas to Europe from 2020 to 2024. The
Department said that “the United States’ intention is to stop
contract provides for transit of at least 65 BCM in 2020, a
construction of Nord Stream 2” and that PEESA’s sanctions
volume equal to about 73% of the 2019 volume of 89.6
would be imposed “unless related parties immediately
BCM, and 40 BCM a year from 2021 to 2024, a volume
demonstrate good faith efforts to wind-down.”
equal to about 45% of the 2019 volume. According to
Naftogaz, the contract will lead to at least $7.2 billion in
The House- and Senate-passed versions of the FY2021
transit revenue over five years.
National Defense Authorization Act (H.R. 6395, §1248; S.
4049, §6231) would clarify and expand the PEESA
If Nord Stream 2 becomes operational, observers expect it
sanctions to target vessels engaged in a broad set of pipe-
to further reduce gas transit through Ukraine. This would
laying activities, as well as those who facilitate their sale,
not necessarily increase Ukraine’s vulnerability to energy
lease, or provision; provide underwriting services or
supply cutoffs; Ukraine stopped importing natural gas
insurance; or provide certain upgrades or installation
directly from Russia in 2016. It could lead to declines in
services. In August 2020, Senators Tom Cotton, Ted Cruz,
transit revenues, however, and increase Ukraine’s strategic
and Ron Johnson warned officials at Germany’s Mukran
vulnerability, if reduced dependence for gas transit leads
Port of “crushing legal and economic sanctions” if Nord
Moscow to be even less constrained toward Ukraine.
Stream 2 were completed.
U.S. Policy
Other relevant sanctions legislation is included in Section
The Trump Administration’s attention to European natural
232 of CRIEEA, which authorizes (but does not require)
gas issues has focused primarily on expanding U.S. LNG
sanctions on those who invest at least $1 million, or $5
exports to the EU, part of a larger effort to diversify
million over 12 months, or engage in trade valued at the
European energy imports, and on opposing the Nord Stream
same amount for the construction of Russian energy export
2 pipeline.
pipelines (22 U.S.C. §9526). On July 15, 2020, the State
Department published updated guidance clarifying that
Congress also has expressed opposition to Nord Stream 2.
Section 232 would “now include investments or other
The Countering Russian Influence in Europe and Eurasia
activities related to … Nord Stream 2 and the second line of
Act of 2017 (CRIEEA, P.L. 115-44, Title II) states that it is
TurkStream”; earlier guidance had noted that Section 232
U.S. policy to “oppose the Nord Stream 2 pipeline given its
would not apply to projects for which contracts were signed
detrimental impacts on the EU’s energy security, gas
prior to August 2, 2017, the date of CRIEEA’s enactment.
market development in Central and Eastern Europe, and
energy reforms in Ukraine.” In December 2018, the House
Some in Europe have warned that the threat of additional
of Representatives passed H.Res. 1035, which called for the
U.S. sanctions could unintentionally galvanize support for
cancellation of Nord Stream 2 and the imposition of
Nord Stream 2 from erstwhile opponents of the pipeline.
sanctions with respect to the project.
EU officials on record as opposing the pipeline
subsequently have stated that the EU rejects as a “matter of
U.S. Sanctions Related to Nord Stream 2 principle” the imposition of sanctions against EU
The Protecting Europe’s Energy Security Act of 2019
companies conducting legitimate business in line with EU
(PEESA; P.L. 116-92, Title LXXV) establishes sanctions
and European law. Other opponents of the pipeline, such as
on foreign persons whom the President determines have
the Polish government, support sanctions as necessary to
sold, leased, or provided subsea pipe-laying vessels for the
prevent completion of the project.
construction of Nord Stream 2 and TurkStream (another
Russian pipeline that is to supply natural gas to Europe), or
For related products, see CRS Report R42405, European
any successor pipeline, since December 20, 2019 (the date
Energy Security: Options for EU Natural Gas
of the legislation’s enactment). TurkStream was
Diversification; and CRS In Focus IF11177, TurkStream:
inaugurated in January 2020.
Russia’s Newest Gas Pipeline to Europe.
PEESA provides for a 30-day wind-down period;
Paul Belkin, Analyst in European Affairs
exceptions for repairs, maintenance, environmental
Michael Ratner, Specialist in Energy Policy
remediation, and safety; and a national security waiver. In
Cory Welt, Specialist in European Affairs
addition, PEESA provides for the termination of sanctions
if the President certifies to Congress “that appropriate

Russia’s Nord Stream 2 Pipeline: Running in Place

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