Nord Stream 2 sanctions: Ukraine might benefit from extra delay in pipeline construction

UKRAINE - In Brief 18 Dec 2019 by Dmytro Boyarchuk

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On December 17 the US Senate approved the National Defense Authorization Act for Fiscal Year 2020, which presumes sanctions for subcontractors building the Nord Stream 2 gas pipeline from Russia to Germany. Russia is trying to build several bypass routes to European countries around Ukraine. Initially the Ukrainian gas pipeline was the main channel for Russian natural gas supplies to the European market (nearly 80% of gas supplies). In light of permanent tensions between Moscow and Kyiv, Kremlin has decided strategically to get rid of its dependence on the Ukrainian gas pipeline. The first Nord Stream line was finished in 2011 but it was not enough for total replacement of the Ukrainian gas pipeline. Nord Stream 2 should fix this problem for Moscow and allows making Ukraine’s line a supplementary channel. The launch of Nord Stream 2 was planned for January 2020, exactly for the date when the current gas transit contract with Ukraine expires. But the project is delayed, which gives Naftogaz and the new operator of the gas transit system of Ukraine more bargaining power in negotiations with Gazprom. Moscow insists on a short-term contract, just to cover the gap created by delay in Nord Stream 2 construction. Naftogaz and the gas pipeline operator are demanding a long-term contract that secures gas transit through Ukrainian even after Nord Stream 2 starts working. The US sanctions give an extra advantage to Ukraine to bargain for better deal. Nord Stream 2 is in its final stage. We have doubts the measure would kill the project; Russia will find a way to overcome the sanctions because the project is of critical importance for the Kremlin. But no doubt sanctions will becom...