Updated December 9, 2021
Russia’s Nord Stream 2 Natural Gas Pipeline to Germany
Russia’s Nord Stream 2 natural gas pipeline would increase
governments have not reduced dependence on Russian gas,
Russia’s natural gas export capacity directly to Germany,
which accounted for about 48% of EU natural gas imports
bypassing Ukraine, Poland, and other transit states. Pipeline
in 2020. Russian gas exports to the EU were up 18% year-
construction reportedly is complete, but the pipeline must
on-year in the first quarter of 2021. Factors behind reliance
receive certification from German regulators before it
on Russian supply include diminishing European gas
becomes operational. Successive Congresses and U.S.
supplies, commitments to reduce coal use, Russian
Administrations have opposed Nord Stream 2, reflecting
investments in European infrastructure, and the perception
concerns about European dependence on Russian energy
of many Europeans that Russia remains a reliable supplier.
and Russian aggression in Ukraine. Germany has been a
Figure 1. Nord Stream Gas Pipeline System
key proponent of the pipeline, which German officials view
as an important natural gas corridor 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 towards 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 counter Russian attempts to “use energy as a

weapon,” it made no mention of halting progress on Nord
Source: Gazprom, edited by CRS.
Stream 2. Critics argue it could be difficult to hold
Germany to its commitments and that the Administration
Supporters of Nord Stream 2, including the German and
should pursue additional sanctions to prevent the pipeline
Austrian governments, have maintained that the pipeline
from becoming operational.
would enhance EU energy security by increasing the
capacity of a direct and secure supply route. German
Background and Current Status
officials say they support the development of infrastructure
Nord Stream 2 lies alongside the Nord Stream 1 pipeline, in
to ensure that gas can be transported across Europe once it
operation since 2011. Nord Stream 2 (consisting of two
reaches Germany. They stress that Germany supports
lines) is expected to double the total capacity of the Nord
broader European energy supply diversification efforts,
Stream system, from 55 billion cubic meters (BCM) to 110
including construction of new liquefied natural gas (LNG)
BCM per year. The pipeline is owned by the Russian state-
terminals in northern Germany.
owned energy company Gazprom. About half the cost is
reportedly financed by five European companies: Engie,
Opponents of the pipeline argue that it would give Russia
OMV, Shell, Uniper, and Wintershall.
greater political and economic leverage over Germany and
other countries that are dependent on Russian gas, leave
Pipeline construction was initially suspended in December
some countries more vulnerable to supply cutoffs or price
2019, after the passage of U.S. legislation establishing new
manipulation by Russia, and increase Ukraine’s
sanctions related to the pipeline, but resumed one year later.
vulnerability to Russian aggression. They point, for
Despite subsequent U.S. sanctions on 25 Russian-related
example, to Russia’s reluctance in late 2021 to increase gas
entities and vessels, Gazprom announced in September
flows to Europe amidst renewed demand and rising prices.
2021 that it had completed pipeline construction. Additional
Impact on Ukraine
steps, including certification by German authorities, are
required before the pipeline can transport gas. In November
In recent years, Russia has sought to reduce the amount of
2021, Germany’s energy regulator announced it was
natural gas it transits through Ukraine. Before Nord Stream
suspending the certification process pending establishment
1 opened in 2011, about 80% of Russia’s natural gas
of a subsidiary to run the pipeline on German territory.
exports to Europe transited Ukraine. In 2019, about 45% of
Barring additional delays, analysts expect certification
these exports transited Ukraine.
could be completed between March and June 2022.
In December 2019, after the United States established new
Although the European Union (EU) has articulated an
sanctions related to Nord Stream 2, Gazprom and the
ambitious energy diversification strategy, some European
Ukrainian state-owned energy company Naftogaz renewed
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Russia’s Nord Stream 2 Natural Gas Pipeline to Germany
a contract for the transit of Russian natural gas to Europe
volume of Russian energy exports transiting through
from 2020 to 2024. The contract provided for transit of at
existing pipelines in other countries, particularly Ukraine.”
least 65 BCM in 2020 and 40 BCM a year from 2021 to
2024. In 2020, Russia shipped about 56 BCM to Europe via
On February 22, 2021, the Biden Administration identified
Ukraine, although Ukraine reportedly received the full
Fortuna and KVT-RUS as also subject to sanctions under
contracted amount of $2.1 billion in transit revenues.
PEESA. Since then, the Administration has designated
another 16 vessels and 7 entities under PEESA or a related
If Nord Stream 2 becomes operational, observers expect
Executive Order 14039. At the same time, the
Russia to further reduce gas transit through Ukraine. This
Administration has waived the application of new sanctions
would not necessarily increase Ukraine’s vulnerability to
on Nord Stream 2 AG, its chief executive officer, and other
energy supply cutoffs; Ukraine stopped importing natural
corporate officers (Nord Stream 2 AG is a Swiss-based
gas directly from Russia in 2016. It would lead to declines
company established by Gazprom).
in transit revenues, however, and could increase Ukraine’s
strategic vulnerability, if reduced dependence on transit
Many Members of Congress have urged the Administration
leads Moscow to act more aggressively in Ukraine.
to impose additional sanctions to attempt to prevent the
pipeline from becoming operational. A House-passed
The Ukrainian and Polish governments jointly criticized the
version of the National Defense Authorization Act for
July 2021 U.S.-German agreement, arguing that the
FY2022 (H.R. 4350, Sec. 1325) would have removed the
apparent decision to forgo efforts to halt Nord Stream 2 had
President’s ability to waive sanctions on national interest
“created a political, military, and energy threat for Ukraine
grounds and required sanctions on entities (and their
and Central Europe, while increasing Russia’s potential to
corporate officers) responsible for planning, constructing,
destabilize the security situation in Europe.”
or operating Nord Stream 2.
U.S. Sanctions
Evolving U.S. Policy
Successive Congresses and 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 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 also have expressed concern that additional
Section 232 of the Countering Russian Influence in Europe
U.S. sanctions could jeopardize U.S.-German and U.S.-
and Eurasia Act of 2017 (CRIEEA, P.L. 115-44, Title II)
European cooperation in other areas, including countering
authorizes sanctions on those who invest at least $1 million,
Russian aggression. Accordingly, the Administration’s
or $5 million over 12 months, or provide goods, services, or
diplomatic efforts increasingly appear to be aimed at
support valued at the same amount for the construction of
helping Ukraine maintain its leverage as a gas transit
Russian energy export pipelines (22 U.S.C. §9526). On
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
of 2019, as amended in 2020 (PEESA; 22 U.S.C. §9526
Russia; and to invest in energy projects in Ukraine. Critics
note; P.L. 116-283, §1242), establishes sanctions on foreign
of the agreement question whether Germany will have the
persons whom the President determines have sold, leased,
ability or political will to fulfill these commitments,
provided, or facilitated the provision of vessels for the
particularly additional EU sanctions on Russia which would
purpose of subsea pipe-laying activities related to the
require the support of all 27 EU member states.
construction of Nord Stream 2 and TurkStream (another
Russian pipeline that supplies natural gas to Europe), or any
In December 2021, Under Secretary of State Victoria
successor pipeline. As amended, PEESA also targets those
Nuland told Congress that if Russia were to further attack
who provide underwriting services or insurance, or who
Ukraine, “our expectation is that the pipeline will be
provide certain upgrades or installation services. Sanctions
suspended.” Media reports suggest that the new German
do not apply to nonbusiness entities of the EU, member
government has signaled a willingness to hold up
states, or a few other non-EU governments.
certification of the pipeline in the event of an attack.
PEESA provides for exceptions and waivers and authorizes
For related products, see CRS Report R42405, European
the President to terminate sanctions if the Administration
Energy Security: Options for EU Natural Gas
certifies to Congress “that appropriate safeguards have been
Diversification; and CRS In Focus IF11177, Turk Stream:
put in place” to minimize Russia’s ability to use the
Russia’s Southern Pipeline to Europe.
sanctioned pipeline project “as a tool of coercion and
political leverage,” and to ensure “that the project would
Paul Belkin, Analyst in European Affairs
not result in a decrease of more than 25 percent in the
Michael Ratner, Specialist in Energy Policy
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 17 · UPDATED

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