Nord Stream 2. Never has a gas infrastructure project generated so much controversy.
The almost-complete 55 Bcm/year pipeline remains a major bone of political contention between Russia, Europe and the US, with the threat of sanctions from Washington testing trans-Atlantic ties.
And a political end-game still looks some way off.
But beyond the politics, the continued uncertainty about when the pipeline will be completed remains a key factor for the European gas market to consider heading into 2021.
Although Nord Stream 2 did lay a small 2.6 km stretch in German waters in December, question marks remain over how and when the longer section in the waters to the south of the Danish island of Bornholm will be installed.
And that is set to have a profound impact on the European gas market in 2021.
Essentially, Gazprom was hoping to rely on Nord Stream 2 to be able to scale down the volume of gas it sends via Ukraine in the coming years.
So much so that the Russian gas giant agreed to transit only 40 Bcm/year (or 110 million cu m/d) of gas via Ukraine in 2021-2024 -- down from 65 Bcm/year in 2020.
But without Nord Stream 2, Gazprom is going to need more Ukrainian transit capacity -- which comes at a cost.
The question is -- how long might this situation last?
S&P Global Platts Analytics believes the project will eventually be completed, with its start-up dependent on the timeline for laying the pipeline in Danish waters.
"Although a lot of uncertainty persists with regards to the timeline of finishing Nord Stream 2, we currently assume a start-up date of Q2 2021," Platts Analytics analyst Ornela Figurinaite said.
But, Figurinaite said, "if construction in Danish waters does not resume by mid-January, we will be forced to postpone our start-up assumption by another quarter."
Platts Analytics assumes around two months for construction once it begins and another two months for commissioning, including testing.
It also expects a lengthy ramp-up period with the pipeline coming to full capacity only in Q4 2021.
US sanctions
A lot now rides on the position of the US and its President-elect Joe Biden. And Biden has made his position regarding Nord Stream 2 very clear.
In 2016 he said that Nord Stream 2 was a "fundamentally bad deal" for Europe, and his election campaign confirmed in October that he would continue to oppose the project.
Nonetheless, Russian President Vladimir Putin on Dec. 17 said he hoped the new US administration would treat its partners "with respect" and not impede the completion of the pipeline, allowing a return to "fair competition in international markets."
There has been speculation that Biden and German Chancellor Angela Merkel could try to find a work-around to the problem to enable Nord Stream 2 to be completed, but with strict rules around its use.
Merkel has repeatedly backed the pipeline, with some commentators referring to it as the Chancellor's "pet" project, and she resisted calls to cancel it following the poisoning of Russian opposition politician Alexei Navalny in August.
Katja Yafimava from the Oxford Institute for Energy Studies (OIES) said the Biden administration may well have some leeway over the imposition of sanctions under the new US defense bill.
"Whether it decides to use this leeway is another question, the answer to which may depend on how vigorously the EU and Germany speak up against the sanctions," Yafimava said.
Political tools
Germany is also looking at ways to avoid the project being derailed by US sanctions by placing assets into a specialized state "trust".
"Politically, the German authorities are clearly on board," John Roberts, analyst at consultancy Methinks, said.
Roberts pointed to the plans for a "complex 'philanthropic' foundation to handle the German infrastructure assets that the system requires in order to avoid any serious penalties that might otherwise be imposed by the US government on German participants in the project."
Yafimava said completion was a question of "when rather than if", saying that if no modernization work was required on the pipelaying vessels the developer plans to use, "then it could be possible to finalize construction in summer 2021 and possibly start flowing gas over winter 2021-22."
She said issues of insurance and certification -- targeted by US sanctions -- would also have to be resolved.
"But this should not be insurmountable as it should be possible to find companies -- possibly Russian -- willing to provide such services," she said.
Roberts agreed that it looked likely that Nord Stream 2 would be completed, and with it Moscow's strategic aims of securing long-term energy supplies to European customers.
"While Germany and other customers are pursuing their energy transition, notably by phasing out coal and -- in Germany's case -- nuclear, Gazprom may have concluded that it must simply be able to pump as much gas as possible into markets in Germany and Central Europe if it is to secure a future for a key export commodity," he said.
