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Gazprom goes ahead despite U.S. sanctions

New U.S. sanctions will make it difficult for Russia to build two gas pipelines to Europe, but the projects are unlikely to be stopped.

03.Aug.17 1:13 PM
By Daria Zaytseva


Gazprom goes ahead despite U.S. sanctions

U.S. President Donald Trump has reluctantly signed into law further sanctions on Russia but some of the measures are discretionary and most White House watchers believe he will not take action against Russia's energy infrastructure.

This would allow two big pipeline projects of Gazprom to go ahead, although at a higher price and with some delays.

The Kremlin, dependent on oil and gas revenues, sees the pipelines to Germany and Turkey - Nord Stream 2 and TurkStream - as crucial to increasing its market share in Europe.

It also fears that Western partners - needed to develop the deepwater, shale and Arctic gas deposits that will fill the pipelines - will be scared off by sanctions. That is - why, the Russian gas giant is taking steps to reduce the impact of sanctions.

It has accelerated pipe-laying by Swiss contractor Allseas Group under the Black Sea for TurkStream - even though there is no final agreement on where the pipeline will make landfall in Turkey. It is also hurriedly building a second TurkStream line to export gas to Europe.

Five Western firms that have invested in Nord Stream 2 - Wintershall and Uniper of Germany, Austria's OMV, Anglo-Dutch Shell, and France's Engie - say it is too early to judge the impact of sanctions. However, the sanctions law is expected to hamper Gazprom's efforts to raise money.

Financial analysts said, Gazprom will have to take on the additional cost itself, depend on Russian state banks, or seek money at higher rates from Asian lenders.

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