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German Uniper Warns It Might Impair Nord Stream 2 Loan If U.S. Sanctions Impede Project

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German Uniper Warns It Might Impair Nord Stream 2 Loan If U.S. Sanctions Impede Project

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German company Uniper, Gazprom’s partner on Nord Stream 2 appears to have frozen construction of the project.

Uniper, which is one (not the only one) of Gazprom’s financial partners in the Nord Stream 2 project, admitted that the pipeline under the Baltic Sea could potentially never be completed. This is stated in the company’s report for January-June.

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“Nord Stream 2: Project Failure Risk

With the US intensifying their efforts on targeted sanctions against the Nord Stream 2 project the probability of a delay or even non-completion of the pipeline is increasing.

Uniper actively monitors the situation and takes all required actions to ensure compliance with applicable rules.

Uniper is also in constant exchange with relevant stakeholders about the updated grandfathering guidance on CAATSA (Countering America’s Adversaries Through Sanctions Act) by the US Department of State.

Nord Stream 2 is working to mitigate the effects of the currently still suspended pipelaying activity and to bring the project to completion. A completion of the project receives strong political support from several country governments as well as the EU.

The Nord Stream 2 Project failure risk continues to qualify as a major individual risk for Uniper. In case the project can ultimately not be completed Uniper may have to impair the loan provided to Nord Stream 2 and forfeits the planned interest income.”

The company noted that Nord Stream 2 now enjoys the support of the governments of a number of countries. However, they warned that if it becomes clear that the project will not be completed, then Uniper may have to write off the loan provided to the company, which will lead to a shortfall in the planned income.

Uniper is not disclosing the size of the loan.

“NOTE:

Impairment is a permanent decline in the value of an asset. This situation exists when the cash flows or other benefits generated by an asset decline, as determined through a periodic assessment. If there is impairment, then the difference between the fair value of the asset and its carrying amount is written off.

A loan is considered to be impaired when it is probable that not all of the related principal and interest payments will be collected.

The company is one of the financial backers of the $11.2 billion project led by Russia’s Gazprom, along with Austria’s OMV, Wintershall DEA, Shell and France’s Engie.

“We do not comment on the potential consequences of the threats of US sanctions and current legislative initiatives in the United States,” Nord Stream 2 press service commented on the matter.

At the end of July, the US Congress approved new sanctions against Nord Stream 2. These are restrictions against any vessels involved in construction. The sanctions will also affect companies that provide insurance for ships, their maintenance, and the installation of special equipment on them.

On August 6th, a group of US senators threatened “financial destruction” of Fährhafen Sassnitz GmbH, the operator of the port of Mukran on the island of Rugen. It is there that the pipes for the branches of the gas pipeline are stored, and also there are two vessels capable of completing the construction of the gas pipeline – the Akademik Chersky pipelayer and the Fortuna pipelayer.

Earlier, US President Donald Trump called the fight against Nord Stream 2 one of his achievements. According to him, in this way he protects Germany and German taxpayers, for whom it is unprofitable to pay Russia billions of dollars for energy resources.

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