Russia is desperately trying to circumvent economic sanctions imposed on the Nord Stream 2 gas pipeline, Ukraine's Foreign Intelligence Service warns as the Kremlin seeks to complete as soon as possible its notorious project posing a major threat to the European energy security.

In this regard, SZRU intelligence analysts have highlighted several directions Russia is pursuing.

1. Temporary (until project completion) change of ownership in companies involved in the project to evade sanctions.

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As an example, SZRU notes the Academic Chersky pipe-laying vessel for which ownership rights in June 2020 were transferred from PJSC GAZPROMFLOTto Temryuk Trans Marin LLC, and then in late 2020 – further to Mortransservice LLC.

Also in late July 2020, PJSC GAZPROMFLOT transferred the vessels – the Ostap Sheremeta and the Ivan Sidorenko – to JSC Nobility.

2. Alternative opportunities for fulfilling requirements for pipeline launch after construction completion (certification and insurance).

One of such options is to do own certification and insurance work. The issue became relevant after a Swiss insurance firm Zurich Insurance Group pulled out of the Nord Stream 2 project over fear of sanctions.

To this end, on January 11, 2021, Russia set up Constanta Insurance Company LLC, which within an unprecedentedly short period – just two days after its founding, on January 13, received an operating license from the Bank of Russia. On March 5, the All-Russian Union of Insurers handed the new firm a permit for overseas operations, thus allowing it to become the pipeline project's insurer.

3. Acquisition from European companies of equipment and services for the Nord Stream 2 in small batches and through intermediaries.

Read alsoRussia putting lives, ecosystem at risk by ignoring WW2 chemical poisons buried along Nord Stream 2 route – SZRUIn September 2020, equipment for working on pipe edges and electro-hydraulic power units was purchased for the Akademik Chersky pipelayer from the Italian company Nuova Patavium. To escape sanctions, a scheme was tailored to deliver the equipment to Russia in several batches, each worth below $200,000. After the entire set arrived, it was forwarded to the port of destination and installed on board the Academik Chersky.

These facts have been confirmed by a Deutsche Welle investigation, SZRU recalls.

In addition, Poland has slapped sanctions on two German vessels, the Krebs Jet and the Krebs Geo, both flying Poland's flag. The ships took part in the Nord Stream 2 project, mostly delivering crews to pipe-laying vessels and monitoring protected areas in the construction zone). The Gdańsk Maritime Chamber has deregistered both vessels. The procedure has been launched for recalling the right to fly Poland's flag, while ship operation safety paperwork was revoked.

Nord Stream 2: Background

The Nord Stream 2 project envisages the construction and operation of two gas pipeline branches with a total throughput capacity of 55 billion cubic meters of natural gas per year from the coast of Russia through the Baltic Sea to Germany. It should connect Russia's Ust-Lug and Germany's Greifswald. This new pipeline bypassing Ukraine is to be built next to the existing Nord Stream 1 pipeline.

The construction of the pipeline was expected to be completed before the end of 2019.

The pipeline will be 1,220 km long. The project is being implemented by Russia's Gazprom in alliance with a number of European companies. Ukraine stands against the project as it will most likely strip the country of its gas transit country status, while potential annual revenue losses are estimated at US$3 billion. The project is also highly criticized by the U.S., Poland, and the Baltic States.

The United States is urging European allies and private companies to halt works on Nord Stream 2, and is preparing broader sanctions against the Russian project in the coming weeks.

The U.S. Senate approved the National Defense Authorization Act 2021, which provides for new sanctions against Russia's Nord Stream 2.

On January 7, 2021, a fund was established in Germany to support the completion of the Nord Stream 2 project.

On January 13, 2021, the U.S. Department of State notified European companies involved in the construction of Nord Stream 2 of the risk of imposing new sanctions.

On January 18, 2021, the United States warned allies in Europe about its intention to impose sanctions on the Russian ship Fortuna, which is engaged in the construction of the Nord Stream 2 gas pipeline.

On February 22, 2021, the United States imposed new sanctions on the Russian FORTUNA vessel building Nord Stream 2.

As of February 23, 2021, eighteen European companies at once refused to partake in completing the construction of Nord Stream 2 over fears of U.S. sanctions.

On March 4, 2021, the construction of Nord Stream 2 in Danish waters was extended by late September.

On March 14, Executive Vice-President for the European Green Deal Frans Timmermans said that Europe does not need the Nord Stream 2 pipeline.

On March 18, Ukrainian President Volodymyr Zelensky branded Russia's Nord Stream 2 gas pipeline a trap for all countries across Europe.