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Russia’s Nord Stream 2 Natural Gas Pipeline to Germany
Nord Stream 2, a natural gas pipeline nearing completion, is
which accounted for about 48% of EU natural gas imports
expected to increase the volume of Russia’s natural gas
in 2020. Russian gas exports to the EU were up 18% year-
export capacity directly to Germany, bypassing Ukraine,
on-year in the first quarter of 2021. Factors behind reliance
Poland, and other transit states (Figure 1). Successive U.S.
on Russian supply include diminishing European gas
Administrations and Congresses have opposed Nord Stream
supplies, commitments to reduce coal use, Russian
2, reflecting concerns about European dependence on
investments in European infrastructure, Russian export
Russian energy and the threat of increased Russian
prices, and the perception of many Europeans that Russia
aggression in Ukraine. The German government is a key
remains a reliable supplier.
proponent of the pipeline, which it says will be a reliable
Figure 1. Nord Stream Gas Pipeline System
source of natural gas as Germany is ending nuclear energy
production and reducing coal use.
Despite the Biden Administration’s stated opposition to
Nord Stream 2, the Administration appears to have shifted
its focus away from working to prevent the pipeline’s
completion to mitigating the potential negative impacts of
an operational pipeline. Some critics of this approach,
including some Members of Congress and the Ukrainian
and Polish governments, sharply criticized a U.S.-German
joint statement on energy security, issued on July 21, 2021,
which they perceived as indirectly affirming the pipeline’s
completion. Although the statement included a German
pledge to increase energy investments in Ukraine and to
counter future Russian attempts to “use energy as a
Source: Gazprom, edited by CRS.
weapon,” it made no mention of halting progress on Nord
Note: Ukraine is south of Belarus, between Poland and Russia
Stream 2. Critics argue it will be difficult to hold future
German governments to its commitments and that the
Support and Opposition
Administration should pursue additional sanctions to
Supporters of Nord Stream 2, including the German and
prevent the pipeline from becoming operational.
Austrian governments, argue the pipeline would enhance
EU energy security by increasing the capacity of a direct
Background and Current Status
and secure supply route. German officials say they support
Nord Stream 2 lies alongside the Nord Stream 1 pipeline, in
the development of infrastructure to ensure that gas can be
operation since 2011. The 760-mile-long Nord Stream 2
transported across Europe once it reaches Germany. They
pipeline (consisting of two parallel lines) is expected to
stress that Germany supports broader European energy
double the total capacity of the Nord Stream system, from
supply diversification efforts, including construction of new
55 billion cubic meters (BCM) to 110 BCM per year. The
liquefied natural gas (LNG) terminals in northern Germany.
pipeline is owned by the Russian state-owned energy
company Gazprom. About half the cost is reportedly
Opponents of the pipeline—including, among others, some
financed by five European companies: Engie (France),
EU officials, the European Parliament, Poland, the Baltic
OMV (Austria), Shell (Netherlands/UK), Uniper
states, Ukraine, the Biden Administration, and many
(Germany), and Wintershall (Germany).
Members of Congress—argue that it would give Russia
greater political and economic leverage over Germany and
Pipeline construction was initially suspended in December
others that are dependent on Russian gas, leave some
2019, after the passage of U.S. legislation establishing new
countries more vulnerable to supply cutoffs or price
sanctions related to the pipeline. Construction resumed in
manipulation by Russia, and increase Ukraine’s
December 2020. In response, the United States has imposed
vulnerability to Russian aggression.
sanctions on 23 Russian-related entities and vessels.
Impact on Ukraine
Construction of the pipeline has continued, however, and is
expected to be complete by fall 2021. Additional steps,
In recent years, Russia has sought to reduce the amount of
including certification by German authorities, are required
natural gas it transits through Ukraine. Before Nord Stream
before the pipeline begins to transport gas.
1 opened in 2011, about 80% of Russia’s natural gas
exports to Europe transited Ukraine. In 2019, about 45% of
Although the European Union (EU) has articulated an
these exports transited Ukraine.
ambitious energy diversification strategy, some European
governments have not reduced dependence on Russian gas,
https://crsreports.congress.gov
Russia’s Nord Stream 2 Natural Gas Pipeline to Germany
In December 2019, after the United States established new
put in place” to minimize Russia’s ability to use the
sanctions related to Nord Stream 2, Gazprom and the
sanctioned pipeline project “as a tool of coercion and
Ukrainian state-owned energy company Naftogaz renewed
political leverage,” and to ensure “that the project would
a contract for the transit of Russian natural gas to Europe
not result in a decrease of more than 25 percent in the
from 2020 to 2024. The contract provided for transit of at
volume of Russian energy exports transiting through
least 65 BCM in 2020 and 40 BCM a year from 2021 to
existing pipelines in other countries, particularly Ukraine.”
2024, a volume equal to about 45% of the 2019 volume. In
2020, Russia shipped about 56 BCM to Europe via Ukraine,
On February 22, 2021, the Biden Administration identified
although Ukraine reportedly received the full contracted
Fortuna and KVT-RUS as also subject to sanctions under
amount of $2.1 billion in transit revenues.
PEESA. On May 19, 2021, the Administration designated
13 more vessels and four entities under PEESA; on August
If Nord Stream 2 becomes operational, observers expect
20, it designated another four entities and vessels. However,
Russia to further reduce gas transit through Ukraine. This
the Administration has waived the application of new
would not necessarily increase Ukraine’s vulnerability to
sanctions on Nord Stream 2 AG, its chief executive officer,
energy supply cutoffs; Ukraine stopped importing natural
and corporate officers (Nord Stream 2 AG is a Swiss-based
gas directly from Russia in 2016. It could lead to declines in
company Gazprom established to construct and operate the
transit revenues, however, and increase Ukraine’s strategic
pipeline). Some Members of Congress have urged the
vulnerability, if reduced dependence on transit leads
Administration to impose additional sanctions to prevent
Moscow to act more aggressively in Ukraine.
the pipeline from becoming operational.
The Ukrainian and Polish governments jointly criticized the
The threat of sanctions appeared to prompt some companies
July 2021 U.S.-German energy security agreement, arguing
to withdraw from Nord Stream 2. The day after PEESA was
that the apparent decision by the United States and
enacted, a Swiss company that had been laying the pipeline
Germany to forgo efforts to halt Nord Stream 2 had
said it would suspend its activities. In January 2021, after
“created a political, military, and energy threat for Ukraine
PEESA was amended to authorize broader sanctions, other
and Central Europe, while increasing Russia’s potential to
European companies, including a certifier and an insurer,
destabilize the security situation in Europe.”
reportedly withdrew from the project.
U.S. Sanctions
Evolving U.S. Policy
Congress and successive U.S. Administrations have
The Biden Administration has called Nord Stream 2 a “bad
opposed Nord Stream 2 since the pipeline’s inception.
deal” and said that U.S. opposition to the pipeline is
Congressional efforts to block the pipeline have focused on
“unwavering.” Nevertheless, U.S. officials have suggested
sanctions, including through progressively more stringent
the Administration’s ability to prevent the pipeline from
sanctions legislation enacted in 2017, 2019, and 2020.
becoming operational is limited, even with additional
sanctions. They at times also have expressed concern that
Section 232 of the Countering Russian Influence in Europe
additional U.S. sanctions could jeopardize U.S.-German
and Eurasia Act of 2017 (CRIEEA, P.L. 115-44, Title II)
and U.S.-European cooperation in other areas, including
authorizes sanctions on those who invest at least $1 million,
countering Russian aggression. Accordingly, the
or $5 million over 12 months, or provide goods, services, or
Administration’s diplomatic efforts increasingly appear to
support valued at the same amount for the construction of
be aimed at helping Ukraine maintain its leverage as a gas
Russian energy export pipelines (22 U.S.C. §9526). On
transit country even if the pipeline becomes operational.
January 19, 2021, the Trump Administration imposed
sanctions on the Russian vessel Fortuna, which Gazprom is
In the July 2021 U.S.-German statement, Germany
using to complete construction of Nord Stream 2, and its
committed to take action against Russia, including possible
corporate owner KVT-RUS, pursuant to Section 232.
sanctions, if Russia uses its energy resources as a weapon
or commits further aggression toward Ukraine; to push for
Additionally, the Protecting Europe’s Energy Security Act
an extension of Ukraine’s gas transit agreement with Russia
of 2019, as amended in 2020 (PEESA; 22 U.S.C. §9526
after the current agreement expires in 2024; and to invest in
note; P.L. 116-283, §1242), establishes sanctions on foreign
energy projects in Ukraine with an initial investment of
persons whom the President determines have sold, leased,
about $250 million. Critics of the agreement question
provided, or facilitated the provision of vessels for the
whether a future German government will have the ability
purpose of subsea pipe-laying activities related to the
or political will to fulfill these commitments, particularly
construction of Nord Stream 2 and TurkStream (another
additional EU sanctions on Russia which would require the
Russian pipeline that supplies natural gas to Europe), or any
support of all 27 EU member states.
successor pipeline. As amended, PEESA also targets those
who provide underwriting services or insurance, or who
For related products, see CRS Report R42405, European
provide certain upgrades or installation services. Sanctions
Energy Security: Options for EU Natural Gas
do not apply to nonbusiness entities of the EU, member
Diversification; and CRS In Focus IF11177, TurkStream:
states, or a few other non-EU governments.
Russia’s Southern Pipeline to Europe.
PEESA provides for exceptions and waivers and authorizes
Paul Belkin, Analyst in European Affairs
the President to terminate sanctions if the Administration
Michael Ratner, Specialist in Energy Policy
certifies to Congress “that appropriate safeguards have been
Cory Welt, Specialist in Russian and European Affairs
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Russia’s Nord Stream 2 Natural Gas Pipeline to Germany
IF11138
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https://crsreports.congress.gov | IF11138 · VERSION 15 · UPDATED