February 28, 2021

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Munich Ree no longer insures Nort Stream 2 and fears US sanctions

The German reinsurance company Munich Ray will stop providing insurance for the Nortstream 2 project, which aims to transport natural gas from Russia to Germany via a pipeline at the bottom of the Baltic Sea. Regarding the branch that provided the insurance, Reuters reported today. The company is concerned about sanctions imposed by the US government on European companies participating in the program.

“Munich Re Syndicate has already resigned (North Stream 2 construction company),” The reinsurance spokesman told Reuters about the branch in an email.

Munich Ray does not wish to comment further on this decision.

The United States says Europe is highly dependent on Russian energy. However, according to analysts, the decision to allow companies to participate in the Nord Stream 2 project was also due to US efforts to gain a foothold in the European gas market.

The construction of the Nord Stream 2 project is expected to cost about $ 11 billion (approximately CZK 234 billion), and the project is already about 94 percent complete. To this end, about 120 km of pipelines have been laid in Danish water and less than 30 km in German water.

Nortstream 2AG did not want to comment on the German reinsurance company’s decision. According to him, it is up to European governments and the European Commission (EC) to protect European companies from sanctions that they describe as “unconstitutional and interfering with a sovereign energy policy.” Zurich Insurance Group, a Swiss insurance company, also pulled out of the plan in January.

The pipeline, which is about 1,200 kilometers long, is expected to carry 55 billion cubic meters of natural gas to Europe each year. The current Nortstream submarine, which has been in operation since 2011, has the same capacity. Gas from the Nord Stream 2 project is also to be used by the Czech Republic, which will be connected via the new Eugene gas pipeline.

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The North Stream 2 project is led by the Russian state-owned gas company Gosprom, which has a key focus on the state. About half of the funding was provided by German companies such as Uniform and Wintershall, British-Dutch company Shell, Austrian OMV and French Engi. Cosprom and its Western partners hope to complete the project this year.