|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||5.00 - 5.07|
|52 Week Range||3.81 - 8.46|
|Beta (5Y Monthly)||0.29|
|PE Ratio (TTM)||1.51|
|Forward Dividend & Yield||0.41 (8.41%)|
|Ex-Dividend Date||Jul 15, 2020|
|1y Target Est||N/A|
The annual U.S. defense policy bill unveiled by lawmakers late on Thursday contains sanctions that backers say will halt one of Russia's biggest projects in Europe: the Nord Stream 2 gas pipeline. The $11 billion Nord Stream 2 project, led by Russian state energy company Gazprom and aimed at doubling the existing pipeline's capacity, is more than 90% complete. Russia says the project to deliver gas under the Baltic Sea to Europe via Germany will begin operating next year.
(Bloomberg) -- Russia can probably get around the latest U.S. sanctions against Nord Stream 2 and complete the controversial pipeline, according to industry executives and analysts.Pipelaying on the project, which is owned by Gazprom PJSC and will bring natural gas from Russia to Germany, will restart on Dec. 5, the pipeline company said on Sunday. And analysts say Gazprom also has options to overcome a new round of sanctions the U.S. Congress is set to approve in the next three weeks.The 9.5 billion-euro ($11.2 billion) link under the Baltic Sea has become a major source of friction in the trans-Atlantic relationship, with President Donald Trump urging Europe part back its dependence on Russian energy supplies. German companies and Chancellor Angela Merkel are bridling against America’s interference, and the western companies set to reap rewards once gas starts flowing have vowed to move ahead.“The pipeline company will restart pipe laying activities, and this pipeline will be finished,” said Rainer Seele, chief executive officer of OMV AG, the Austrian oil company that’s among the western backers of the link. “We are convinced this project is needed.”Both Democrats and Republicans are pushing for legislation by the end of the year that would tighten sanctions against Nord Stream 2. President-elect Joe Biden has joined Trump in opposing Nord Stream 2, leaving little hope that his inauguration in January will defuse the issue.Gazprom has three challenges to resolve to move forward: finding a ship to do the work, obtaining insurance for the project, and getting certification that the work being done is safe and complies with European Union standards. Gazprom and Russia are working on all three fronts.“All in all, it is still possible for Nord Stream 2 to be built by summer 2021 and get all the necessary certification to flow gas the following winter,” said Katja Yafimava, senior research fellow at the Oxford Institute for Energy Studies and one of Europe’s foremost authorities on pipeline politics.Further sanctions probably will lengthen that timeline, but she expects Gazprom eventually will find solutions to each of the hurdles thrown up. The U.S., she says, “must realize it cannot stop it.”There are signs Merkel’s government will help. Ministers in Berlin are coordinating a response with EU nations to the U.S. sanctions, and lawmakers joined industry groups in complaining that American officials are overstepping their authority. Germany’s BDI industry lobby has lashed out at U.S. intervention, saying it “will not only cause considerable economic damage, but will also undermine the sovereignty of Germany and the European Union.”Just a few weeks away from completion, work stopped on the 1,230-kilometer (764-mile) pipeline last December when the U.S. targeted measures against companies working on the link. The Swiss company Allseas Group SA pulled a vessel it had laying the pipeline off the project with all except 160 kilometers already in place on the floor of the Baltic Sea.The biggest question mark has been whether Gazprom has found a ship to finish the work. There was no word on Sunday from Nord Stream 2 about which vessel would be used.Earlier this year, the company brought a ship called the Akademik Cherskiy into the region. It is currently traveling through the Baltic Sea after spending time in Mukran, a key logistics port on the Germany coast, Bloomberg ship-tracking data shows.The next round of sanctions are aimed at preventing companies that access the U.S. financial system from writing insurance for Nord Stream 2. That would hit the primary insurer Zurich Insurance Group AG, according to people with knowledge of the pipeline’s arrangements on that matter. Zurich Insurance said it never comments on specific customers and that it would comply with any regulations that apply.Because of the size of the project, it will probably require a reinsurer to help underwrite the costs. The sanctions may force Nord Stream 2 to source all those services in Russia, perhaps from state-backed entities. One possible solution is the Russian National Reinsurance Co., or RNRC, which was created by Moscow to deal with sanctions risks. There’s no restriction on the nationality of the company writing insurance for the project.“Russia several years ago took care of creating additional domestic capacities for insurance and reinsurance of sanctioned risks, the risks that cannot be ceded to the international markets,” said Anastasia Litvinova, director for EMEA insurance at Fitch Ratings. She declined to comment on specific proposals against Nord Stream 2.Certification is another issue that will take time to solve. Det Norske Veritas Holding AS, the Norwegian company verifying the pipeline’s safety and integrity, said it’s scaling back work for Nord Stream 2 ahead of the decision on sanctions. Denmark’s energy agency says Nord Stream 2 can hire any third party to fulfill legislation, which could allow a Russian company to step in.Yafimava says Gazprom probably needs to find a state-owned entity to do certification if the U.S. sanctions extend to that part of the business, “which is not impossible, but it takes time.”So far, none of Nord Stream 2’s financial backers have pulled out despite escalating anger from the U.S. OMV along with Royal Dutch Shell Plc, Uniper SE, Engie SA and Wintershall AG helped finance the project. Engie’s Chief Financial Officer Judith Hartmann said he’s “still hopeful” that Nord Stream 2 will be completed.READ MORE: U.S. Targets Insurers In Latest Round of Nord Stream 2 Sanctions(Updates with work resuming)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The U.S. is drawing up additional sanctions on the Nord Stream 2 natural gas pipeline project, the latest obstacle in the path of the 9.5 billion-euro ($11.2 billion) Russia-to-Germany link that’s been halted almost a year.House and Senate negotiators agreed to target insurers and technical certification companies working on the project in a defense bill that must pass by the end of the year, according to three people familiar with the matter. The move would add to penalties that stopped work on the natural gas link under the Baltic Sea just a few weeks before it was to be completed.The rules could inflame tensions between the U.S. and Chancellor Angela Merkel over the project, which would bring gas into northern Germany and help Russia’s state-backed exporter Gazprom PJSC tighten its grip on energy supplies to the region. President Donald Trump, backed by both Republicans and Democrats in Congress, have criticized Europe’s reliance on Russia and offered U.S. cargoes of liquefied natural gas as an alternative.By adding insurers and certification companies to face sanctions, the U.S. will make it harder for Gazprom to complete Nord Stream 2, which will run 2,460 kilometers alongside an existing Nord Stream pipeline. Gazprom and its backers including Royal Dutch Shell Group say the pipeline will be needed to meet increasing demand and add flexibility to the system. Opponents say it will allow Russia to choke off flows through Ukraine, the primary route to market for much of Gazprom’s gas.All except 160 kilometers of the link were laid down when Trump imposed sanctions late last year. Those measures prevented AllSeas Group SA from allowing its pipeline-laying ship to set down the last sections of pipe in Danish waters for Gazprom. The new sanctions would prevent ships from getting insurance and technical certifications they require to work offshore Denmark.That would tighten the grip of rules that so far have prevented Gazprom from finishing the pipeline. After AllSeas pulled its vessel off the Nord Stream 2 project, Gazprom said it was working on finding an alternative. It brought its own pipelay ship, the Akademik Cherskiy, into the region. It isn’t clear whether it’s capable of finishing the project. The ship currently is in Mukran, a key logistics port in Germany for Nord Stream 2, according to Bloomberg ship-tracking data. It’s working on building a new ramp to load pipes, according to a report in Berliner Zeitung.The Danish government requires the professional services firm Det Norske Veritas to certify the compliance of Nord Stream 2 before it can be put into operation, said Mitch Jennings, senior analyst at Moscow-based Sova Capital.“According to my understanding, if the pipeline certification is restricted, the launch of the pipeline may become very difficult,” he said. The new sanctions “might require Nord Stream 2 AG to find a certification agency that is willing to be subject to sanctions.”The measures would stop short of hitting German government officials who have allowed the project. New Jersey Senator Bob Menendez, the top Democrat on the Senate Foreign Relations Committee, said in an interview that members of Congress wanted “to make it clear that Germany, as an ally, and public officials within Germany, would not be part of any such sanctions.”The language that would implement the sanctions now requires the U.S. to notify allies before imposition. The provision was added after House Foreign Affairs Chairman Eliot Engel of New York expressed concern that the sanctions would hurt Germany and European countries while letting Russia “off the hook.”“Spit on our closest friends, let Russia off the hook?” Engel said on the House floor in July. “Doesn’t sound right to me.”The sanctions are contained in an amendment to the defense bill and draw their language from legislation introduced earlier this year by Senators Ted Cruz, a Texas Republican, and Jeanne Shaheen, a Democrat from New Hampshire. Cruz and Shaheen were instrumental in pushing through Nord Stream 2 sanctions in last year’s NDAA.German officials have been worried of a possible escalation of the trade conflict before Trump leaves office in January and have as a result tried to postpone the EU sanctions against Boeing Co. but failed because of opposition from the European Commission and France.The new sanctions legislation in the U.S. specifies that previously enacted sanctions apply to all pipe-laying activities and insurance.Earlier this year, the U.S. warned energy companies taking part in Russian pipeline projects of impending sanctions.“Get out now or risk the consequences,” Secretary of State Michael Pompeo said in July.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.