US Nord Stream 2 sanctions likely to ‘bypass’ Wah Seong

Group involved only in pipe coatings, not actual laying work, and its portion already close to completion

PETALING JAYA: Wah Seong Corp Bhd will likely see no impact from the US sanctions being placed on the Nord Stream 2 project, as the group’s portion of work on the gas pipeline is already close to completion.

Sources tell SunBiz that, to their understanding, since the group is only involved in the pipe-coating works and not the actual laying of the undersea pipeline, the sanctions will not apply to Wah Seong.

“They have completed the coatings for this project and are now in the midst of doing the final load out of these pipes. So there would likely be a delay for load out of the final shipment until further notice,” a source said.

According to an MIDF Research report, out of the RM1 billion order book secured for the project, there remains less than 10% to be recognised by Wah Seong at this juncture.

“What is left of the project is mostly on the logistic arrangements. Management expects the project to be completed by endJanuary 2020 which correspondingly will translate to lower revenue recognition coming from the Nord Stream in the coming quarters,” the research house in the note last month.

Wah Seong’s indirect wholly owned subsidiary Wasco Coatings Europe BV (WCEu) bagged the €600 million (RM2.7 billion) contract from Nord Stream 2 AG for the provision of pipe-coating services for the Nord Stream 2 project in September 2016.

Last Friday, US President Donald Trump signed a bill that included legislation imposing sanctions on firms laying pipes for

Nord Stream 2, which seeks to double gas capacity along the northern Nord Stream pipeline route to Germany.

The US has been seeking to sell its own liquefied natural gas to European states, and claims that Nord Stream 2 will make Europe too reliant on Russian supplies.

The Nord Stream 2 pipeline, which will run along the Baltic Sea floor, is expected to start up in the first half of 2020.

Reuters reported on Saturday that Gazprom, the Russian group behind Nord Stream 2, said it will push ahead to complete the pipeline as soon as possible, after the US sanctions prompted SwissDutch company Allseas to suspend pipelaying activities.

Nord Stream 2, which aims to double the Nord Stream route’s existing capacity of 55 billion cubic metres of gas a year, is owned by state-controlled Gazprom, which is financing half of the project worth about €9.5 billion.

Other partners in Nord Stream 2 are Austria’s OMV, German firms Uniper and Wintershall, Anglo-Dutch energy major Royal Dutch Shell and France’s Engie.