Tag: energy security

Russian Pipe-Layer Resumes Work on Nord Stream 2

The Russian-flagged “Fortuna” pipe-laying vessel has resumed work on the controversial “Nord Stream 2” pipeline on January 24. AIS trackers show Fortuna anchored 27 km south of Bornholm island (Denmark),…

The Russian-flagged “Fortuna” pipe-laying vessel has resumed work on the controversial “Nord Stream 2” pipeline on January 24. AIS trackers show Fortuna anchored 27 km south of Bornholm island (Denmark), where gaps remain in the 94%-completed pipeline. 

Overview of Fortuna’s location

Owned by “KVT-RUS,” a Russian company, Fortuna has been recently sanctioned by the U.S. Department of Treasury over its involvement in the Nord Stream 2 project. Any company that does business with Fortuna or its owner, whether a port that provides servicing or an insurer, risks losing access to the U.S. financial system

Thanks to Sentinel-1’s synthetic aperture radar, we can see the ship formation through cloud cover and confirm Fortuna’s location. Dated January 24, the low-res imagery shows Fortuna positioned for pipe-laying operations and assisted by tugs, and other support vessels. 

Sentinel-1 SAR shows Fortuna initiating pipe-laying operations

Fortuna left the German port of Rostock after Danish authorities cleared further constructions on Nord Stream 2 on January 15. Berlin has also greenlighted work on the pipeline in German waters. 

UNSTOPPABLE

It seems that the Nord Stream 2 will go ahead despite bipartisan U.S. sanctions, criticism from Eastern European states, and even a recent resolution passed by the European Parliament that urges Brussels to halt the project. While opposition to the project grew in Germany following Navalny’s poisoning and arrest, Chancellor Merkel remains steadfast.  

The German state of Mecklenburg-Vorpomman even plans to establish an “expandable” foundation to shield the companies involved in Nord Stream 2. The German foundation “for environmental protection” will absorb the heat of U.S. sanctions such as freezing assets, as it does not have commercial plans beyond the pipeline. As a result, the real stakeholders will be unharmed – at least in theory. This operation’s success will largely depend on the Biden administration’s willingness to sanction Germany over Nord Stream 2. 

KEY BACKGROUND

What is Nord Stream 2?

Nord Stream 2 is a submarine pipeline that will carry natural gas from Siberia to a terminal on Germany’s Baltic sea coast. Russian energy giant Gazprom owns 50% of the pipeline. Royal Dutch Shell, Uniper SE, Engie SA, and Wintershall AG hold the rest. Nord Stream 2 is 1,200 km long and will double the throughput of Nord Stream 1.  

Nord Stream 2 map (source: Gazprom)

Why did work on Nord Stream 2 stop?

U.S. sanctions temporarily froze the Nord Stream 2 pipeline. In December 2019, the Swiss company “Allseas” suspended pipe-laying operations after it came in the crosshairs of U.S. departments of State and Treasury. Since then, the Nord Stream 2 consortium has scrambled to devise countermeasures against U.S. sanctions, and searched for a new pipe-laying vessel. 

The consortium contracted Fortuna and the Gazprom-owned Akademik Cherskiy” to complete the job. T-Intelligence wrote about Akademik Cherskiy’s entrance into the Baltic Sea in March 2020, after a nine-month voyage from Russia’s far east. The pipe-layer is currently docked in Wismar, Germany. 

Why is Nord Stream 2 a problem?

  • The project strengthens Russia’s grip on European energy. Nord Stream 2 goes against NATO’s and the European Union’s energy security policies that call for diversifying suppliers so that 30 or 27 nations are not at the mercy of one supplier. As the dominant force on Europe’s energy market, Russia has a long history of using gas exports as a tool of coercion. Gas is also a significant component of the Kremlin’s broader “hybrid warfare” strategy that aims to expand its influence using means other than military. 
  • It undermines Transatlantic unity. A highly divisive topic, Nord Stream 2 exacerbated existing rifts between the U.S (supported by Eastern European states) and NATO’s European core, led by Germany. 
  • It weakens Eastern Europe. Nord Stream 2 will reduce Russia’s dependence on Ukraine and Poland to transport gas into Europe. This could open up eastern Europe to more strong-arm tactics, including further aggression against Ukraine. 

by IRT

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Russian Pipelaying Vessel Enters Baltic Sea to Complete North Stream 2 

Gazprom’s pipelaying vessel “Akademik Cherskiy” is entering the Baltic Sea. The Russian-flagged vessel was likely dispatched to complete the remaining 6% of the controversial North Stream 2 gas pipeline. The…

Gazprom’s pipelaying vessel “Akademik Cherskiy” is entering the Baltic Sea. The Russian-flagged vessel was likely dispatched to complete the remaining 6% of the controversial North Stream 2 gas pipeline. The Akademik Cherskiy’s arrival in the Baltic Sea marks the end of a trip around the world that started in February 2020, when the vessel left its homeport Nakhodka on Russia’s Pacific coast. It is possible that the pipelayer will first conduct a port-call for maintenance and repairs in Kaliningrad or Sankt-Petersburg, before commencing work on the last segment of North Stream 2 near the Danish island of Bornholm. 


NORTH STREAM 2: A THREAT TO EUROPEAN ENERGY SECURITY 

North Stream 2 is a submarine pipeline that will carry natural gas from Russian fields to a terminal on Germany’s Baltic sea coast. The pipeline will more than double the existing capacity of the original North Stream, which was completed in 2011. Besides the Russian energy giant Gazprom, five European companies (OMV, Royal Dutch Shell, Uniper SE, Engie SA and Wintershall AG) participate in the North Stream 2 project.  

North Stream 2 route (source: ICIS.com)

North Stream 2 will significantly increase the EU’s dependency on Russian gas, which the Kremlin has never shied away from using as leverage. Considering the potential geopolitical impact of the pipeline, the Western European support of North Stream 2 has left the Eastern European countries feeling aghast and betrayed. While the EU has been advocating for the diversification of energy sources and suppliers for years, the Union’s core members now seem willing to continue embracing Russian gas.
Ukraine’s national security, in particular, will be impacted by North Stream 2. Before Russia’ annexation of Crimea and covert invasion of Eastern Ukraine, Gazprom was sending 60 percent of its gas exports to Europe through pipelines in Ukraine. While deliveries will continue until 2024, Ukraine’s status as a transit state for Russian gas will be weakened by the new pipeline. As a result, Kyiv will lose whatever geopolitical leverage it has against its hostile neighbor.  

US SANCTIONS FROZE PIPELINE AT 94%

Roughly 94 percent of the 1,230 kilometers (764 miles) long North Stream 2 pipeline was completed when the Trump administration put the companies of the consortium under sanctions.  The Swiss company Allseas Group SA stopped the process of laying underwater pipes in late December 2019, leaving a small gap in the pipeline located in Danish waters around the island of Bornholm (between Sweden and Germany’s Baltic coast).  Since then, the Kremlin has been scrambling for options to continue construction. The delay will push the opening to mid-2020 at the earliest. In 2019, the Russian Foreign Minister named the pipelaying vessel Akademik Cherskiy, which has now arrived in the Baltic Sea, as one of the available options to complete the pipeline. 



EURO-ATLANTIC SPLIT 

If work on North Stream 2 resumes, the split between the United States and the EU countries that participate in the energy project will likely deepen. The Central and Eastern member states of the EU will continue to side with the U.S. and promote the Three Seas Initiative (3SI). The 3SI’s main project is to facilitate the influx of American liquefied natural gas (LNG) to the Eastern European energy market as an affordable alternative to crude Russian gas. To this end, Poland has invested generously in its Swinoujscie LNG terminal on the Baltic Sea coast, where vessels from the United States can unload cargo.

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[UPDATED] Saudis To Retaliate After Iranian-Backed Drone Attack

The Kingdom of Saudi Arabia has announced that it is devising retaliation plans for the drone attacks on its oil refineries, which have been claimed by the Iranian-backed Houthi militants…

The Kingdom of Saudi Arabia has announced that it is devising retaliation plans for the drone attacks on its oil refineries, which have been claimed by the Iranian-backed Houthi militants in Yemen. In a call with Saudi Crown Prince Mohammed Bin Salman on Saturday, United States President Donald Trump offered support for Saudi self-defense. 

According to the Houthis, the dawn attack on Saturday was carried out by ten unmanned aerial vehicles (UAVs) launched from Yemen and targeted the Aramco oil facilities in Abqaiq and Khurais. The largescale attack caused major explosions and forced Aramco to cease production at the two facilities. With oil production suspended, Aramco lost halfof its crude output (5.7 million barrels per day), leading to a five percent reduction in global oil supply. 

As Saudi Arabia produces around 9.85 million barrels of oil per day, the supply reduction has caused concerns on the global energy markets. Energy experts warn that the recent attack could lead to a slight surge in oil prices. The Saudi Energy Ministry has nevertheless assured that the disruption will be offset by supplies from Saudi inventories. The attack represents a serious blow for Aramco, since the company is currently preparing its stock market debut and international listing.  

Abqaiq is pivotal for Saudi energy operations, as the facility processes crude oil from the world’s largest oil field (Ghawar) and redirects it to the world’s biggest offshore oil loading facility (Ras Tanura) and to export terminals on the Red Sea coast. Khurais, the other target, is Saudi Arabia’s second largest oil field, which is responsible for the production of over 1 million barrels of oil per day. 

While the Houthis have been conducting attacks on Saudi energy infrastructure for months and have made extensive use of Iranian supplied missiles and UAVs, their claim to the recent attack is disputed by US Secretary of State Mike Pompeo as well as many open-source intelligence analysts, who point towards Iraq instead. Photos on social media allegedly show the remains of an Iranian-made Quds-1 or Soumar cruise missile on Saudi soil. Analysts believe the missile was launched from southern Iraq due to its proximity to the two Saudi installations. Other sources claim that a UAV violated Kuwaiti airspace on Saturday and loitered around 250 meters above the Dar Salwa presidential palace.

The Iraqi government was quick to deny that its territory was used to attack the Saudi installations. However, this would not be the first attack on the Kingdom that was launched from Iraq. US intelligence has, for example, found that a UAV raid on a Saudi pipeline on May 14, 2019 was launched from Iraq instead of Yemen. Iraq hosts a myriad of Shiite militias, which are trained, sponsored, and coordinated by the Iranian Revolutionary Guards Corps-Quds Force (IRGC).

Regardless where the attack originated, Iran remains the shadow culprit. The attack on the Aramco oil facilities will likely set the peace negotiations between the Arab Coalition and the Houthis back and further escalate the conflict between Saudi Arabia and Iran. While the US remains committed to Saudi security, the Trump administration does not seem willing to retaliate on behalf of Riyadh. Instead, the White House has provided strong political support and military aid to Saudi forces to take matters into their own hands.

The Saudis could either re-intensify the air campaign against Houthi targets in Yemen, conduct covert operations against IRGC-backed elements in Iraq, or directly prosecute Iranian offshore oil facilities in the Persian Gulf.


Read our update on the developing situation

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