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Updated February 8, 2021
Russia’s Nord Stream 2 Pipeline: Continued Uncertainty
Uncertainty continues to cloud the future of Nord Stream 2,
energy security by increasing the capacity of a direct and
an unfinished natural gas pipeline that would increase the
secure supply route. German officials say they support the
amount of Russian natural gas exported directly to
development of infrastructure to ensure that gas can be
Germany and on to other European countries, bypassing
transported across Europe once it reaches Germany. They
Ukraine and other transit states (Figure 1). Successive U.S.
stress that Germany supports broader European energy
Administrations and Congresses have opposed Nord Stream
supply diversification efforts, including construction of new
2, reflecting concerns about European dependence on
liquefied natural gas (LNG) terminals in northern Germany.
Russian energy and the threat Russia poses to Ukraine. In
January 2021, the Trump Administration imposed
Figure 1. Nord Stream Gas Pipeline System
congressionally authorized sanctions on the Russian vessel
Fortuna and its owner for supporting Nord Stream 2’s
construction. The Biden Administration has expressed
opposition to the pipeline and has stated it intends to review
existing sanctions in consultation with European partners.
Nord Stream 2 construction was initially suspended in
December 2019, after the passage of U.S. legislation
establishing sanctions related to the pipeline. At the time,
fewer than 100 miles of the approximately 760-mile long
pipeline system (consisting of two parallel lines) remained
to be laid. Construction of a small section resumed in
December 2020. Although the United States has imposed
sanctions on the Fortuna, reports indicate that the vessel
has begun its work on the pipeline. The German
Source: Gazprom, edited by CRS.
government continues to support Nord Stream 2. German
and EU officials, including some opponents of the pipeline,
Opponents of the pipeline—including, among others, some
have condemned U.S. sanctions as an infringement on
EU officials, the European Parliament, Poland, the Baltic
national sovereignty that could have negative repercussions
states, Ukraine, the Trump and Biden Administrations, and
for broader transatlantic cooperation.
many Members of Congress—argue that it will give Russia
greater political and economic leverage over Germany and
Background
others that are dependent on Russian gas, leave some
Nord Stream 2 is being constructed alongside the Nord
countries more vulnerable to supply cutoffs or price
Stream 1 pipeline, in operation since 2011. If completed,
manipulation by Russia, and increase Ukraine’s
Nord Stream 2 would double the total capacity of the
vulnerability to Russian aggression.
system, from 55 billion cubic meters (BCM) to 110 BCM
per year. Nord Stream 2 is owned by the Russian state-
More recently, pipeline opponents, including within
owned energy company Gazprom. About half the cost is
Germany, have argued the German government should
reportedly financed by five European companies: Engie
block the pipeline in response to malign Russian activity,
(France), OMV (Austria), Shell (Netherlands/UK), Uniper
including a nerve agent attack against and arrest of Russian
(Germany), and Wintershall (Germany).
opposition figure Alexei Navalny. German political leaders
have uniformly condemned Russia’s actions against
Support and Opposition
Navalny, but Chancellor Angela Merkel and others
Although the EU has articulated an ambitious energy
continue to argue that the infrastructure project can be
diversification strategy, some European governments have
“decoupled” from ongoing political disputes with Russia.
not reduced dependence on Russian gas, which accounted
for about 45% of EU natural gas imports in 2019 and 39%
Impact on Ukraine
of imports in the first half of 2020. Factors behind
In recent years, Russia has sought to reduce the amount of
continued reliance on Russian supply include diminishing
natural gas it transits through Ukraine. Before Nord Stream
European gas supplies, financial investments by Russia in
1 opened in 2011, about 80% of Russia’s natural gas
European infrastructure, and the perception of many
exports to Europe transited Ukraine. In 2018, about 40% of
Europeans that Russia remains a reliable supplier.
these exports transited Ukraine.
Supporters of Nord Stream 2, including the German and
In December 2019, after the United States established new
Austrian governments, argue the pipeline will enhance EU
sanctions related to Nord Stream 2, Gazprom and the
Ukrainian state-owned energy company Naftogaz renewed
https://crsreports.congress.gov
Russia’s Nord Stream 2 Pipeline: Continued Uncertainty
a contract for the transit of Russian natural gas to Europe
PEESA provides for various exceptions and waivers and
from 2020 to 2024. The contract provided for transit of at
authorizes the President to terminate sanctions if the
least 65 BCM in 2020, a volume equal to about 73% of the
Administration certifies to Congress “that appropriate
2019 volume, and 40 BCM a year from 2021 to 2024, a
safeguards have been put in place” to minimize Russia’s
volume equal to about 45% of the 2019 volume. In 2020,
ability to use the sanctioned pipeline project “as a tool of
Russia shipped about 56 BCM to Europe via Ukraine,
coercion and political leverage,” and to ensure “that the
although Ukraine received the full contracted amount of
project would not result in a decrease of more than 25
$2.1 billion in transit revenues.
percent in the volume of Russian energy exports transiting
through existing pipelines in other countries, particularly
If Nord Stream 2 becomes operational, observers expect
Ukraine.”
Russia to further reduce gas transit through Ukraine. This
would not necessarily increase Ukraine’s vulnerability to
Response to U.S. Sanctions
energy supply cutoffs; Ukraine stopped importing natural
Although the United States has not imposed PEESA-related
gas directly from Russia in 2016. It could lead to declines in
sanctions, the threat of sanctions appears to have
transit revenues, however, and increase Ukraine’s strategic
encouraged some companies to withdraw from the Nord
vulnerability, if reduced dependence on transit leads
Stream 2 project. The day after PEESA was enacted in
Moscow to act more aggressively in Ukraine.
December 2019, Allseas, a European company that had
been laying the pipeline, stated that it was suspending its
U.S. Sanctions
activities. In January 2021, after PEESA was amended to
Congress and successive U.S. Administrations have
authorize broader sanctions, at least three European
opposed Nord Stream 2 since the pipeline’s inception.
companies, including a certifier and an insurer, reportedly
Increasingly, congressional efforts to block the pipeline
withdrew from the project.
have focused on sanctions, including through progressively
more stringent sanctions legislation enacted in 2017, 2019,
Despite ongoing questions about the viability of the
and 2020.
pipeline, Fortuna reportedly is continuing work and
Russian officials state the pipeline will be completed. In
The Countering Russian Influence in Europe and Eurasia
January 2021, the German regional government where Nord
Act of 2017 (CRIEEA, P.L. 115-44, Title II) states that it is
Stream 2 is projected to make landfall announced the
U.S. policy to “oppose the Nord Stream 2 pipeline given its
establishment of a government entity intended to shield
detrimental impacts on the EU’s energy security, gas
companies involved in pipeline construction from U.S.
market development in Central and Eastern Europe, and
sanctions.
energy reforms in Ukraine.” In 2018, the House of
Representatives passed H.Res. 1035, which called for the
Some European governments, including opponents of Nord
cancellation of Nord Stream 2 and the imposition of
Stream 2, have joined the German government in criticizing
sanctions with respect to the project.
U.S. sanctions. EU officials on record as opposing the
pipeline have stated that the EU rejects as a “matter of
Section 232 of CRIEEA authorizes sanctions on those who
principle” the imposition of sanctions against EU
invest at least $1 million, or $5 million over 12 months, or
companies conducting legitimate business in line with
provide goods, services, or support valued at the same
European law. Other opponents of the pipeline, such as the
amount for the construction of Russian energy export
Polish government, support sanctions as necessary to
pipelines (22 U.S.C. §9526). On January 19, 2021, the
prevent completion of the project.
Trump Administration imposed sanctions on the Russian
vessel Fortuna, which Gazprom is using to complete
Germany’s continued support for the pipeline has prompted
construction of Nord Stream 2, and its corporate owner
some critics of both Nord Stream 2 and U.S. sanctions to
KVT-RUS, pursuant to Section 232.
argue that U.S. diplomatic efforts should focus more on
ensuring that Ukraine maintains its leverage as a gas transit
Additionally, the Protecting Europe’s Energy Security Act
country even if the pipeline is built. This could include
of 2019, as amended in 2020 (PEESA; 22 U.S.C. §9526
securing a commitment from Germany for punitive
note; P.L. 116-283, §1242), establishes sanctions on foreign
measures against Russia should Nord Stream 2 supplant gas
persons whom the President determines have sold, leased,
flows through Ukraine. Proponents of this approach express
provided, or facilitated the provision of vessels for the
concern that U.S. sanctions on European companies could
purpose of subsea pipe-laying activities related to the
jeopardize U.S.-German and U.S.-European cooperation in
construction of Nord Stream 2 and TurkStream (another
other areas, including countering Russian aggression, while
Russian pipeline that is to supply natural gas to Europe), or
failing to prevent the pipeline’s construction.
any successor pipeline. TurkStream’s subsea pipeline to
Turkey was inaugurated in January 2020. As amended,
For related products, see CRS Report R42405, European
PEESA also targets those who provide underwriting
Energy Security: Options for EU Natural Gas
services or insurance, or who provide certain upgrades or
Diversification; and CRS In Focus IF11177, TurkStream:
installation services. Sanctions do not apply to non-business
Russia’s Newest Gas Pipeline to Europe.
entities of the EU, member states, or the governments of
Norway, Switzerland, and the United Kingdom.
Paul Belkin, Analyst in European Affairs
Michael Ratner, Specialist in Energy Policy
Cory Welt, Specialist in Russian and European Affairs
https://crsreports.congress.gov
Russia’s Nord Stream 2 Pipeline: Continued Uncertainty
IF11138
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https://crsreports.congress.gov | IF11138 · VERSION 11 · UPDATED