Gazprom stock surges in Moscow as Nord Stream 2 construction completed

Shares in Russia’s state-run energy giant Gazprom pushed higher on the Moscow exchange after the company announced that the final sections of the controversial Nord Stream 2 pipeline have been completed.

Gazprom stock increased in value by 1.48% to more than 329 rubles ($4.52) per share shortly after the news was revealed. In opening trading, the shares gained 0.81% to 327.2 rubles per note.

On Friday, the chairman of Gazprom’s management committee, Alexey Miller, announced during the company’s morning briefing that the construction of the gas pipeline had been fully completed at 8:45am Moscow time.

Earlier this month, Russian Energy Minister Nikolai Shulginov said that gas pumping via Nord Stream 2 is expected to start by the end of this year.

The project consists of two pipelines aimed at boosting annual deliveries of natural gas up to 55 billion cubic meters from the Siberian fields in Russia via the Baltic Sea, straight to Germany. The $12 billion pipeline is set to improve Berlin’s energy security and lower gas prices by making the process less dependent on third-party countries transiting the fuel.

The Nord Stream 2 pipeline project encountered numerous roadblocks, with the US government threatening companies and states involved in the construction with sanctions. The White House repeatedly slammed the German government, claiming that the project would undermine Europe’s energy security and stability.

EU member states such as Poland, Latvia, Lithuania, Romania and Hungary also persistently expressed disapproval of Nord Stream 2. Ukraine, which used to benefit from the transit of gas from Russia to Europe, is also opposing the project, as its successful implementation will inevitably deprive the country’s budget of transit fees.

In July, Washington and Berlin reached a new deal, with the US offering to drop sanctions and cease its interference in the final stages of the pipeline setup. In exchange, it asked Germany to invest in Ukraine and help Kiev maintain its supposed right to transit fees for Russian gas, a hefty proportion of which is currently delivered to Europe via a Soviet-era pipeline going through Ukraine’s territory. 

Meanwhile, Brussels approved new amendments to the EU Gas Directive in February 2019. The rules require companies that produce, transport and distribute gas within the bloc to be separate to ensure fair competition in the market and to prevent companies from possibly obstructing competitors’ access to infrastructure. 

In August, a Gazprom subsidiary involved in constructing the Nord Stream 2 pipeline lost a court battle over exclusive access to the project’s infrastructure. The ruling may force the company to sell the pipeline to an EU-based operator.

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