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US threatens to impose sanctions on companies involved in Nord Stream 2 pipeline project

22 May 2019

According to Reuters, US Energy Secretary Rick Perry said on May 21 in Kiev that a sanctions bill putting onerous restrictions on companies involved in the Nord Stream 2 project would come in the “not too distant future”. The project involves the construction of a large volume gas pipeline under the Baltic Sea between Russia and Germany.

Nord Stream 2 pipelaying vessel: Shutterstock
Nord Stream 2 pipelaying vessel: Shutterstock

The following day, the German Economy Ministry said it had taken note of the threat of US sanctions, but that Berlin rejected any such move that had an extraterritorial effect.

Perry’s comments come a week after a small bipartisan group of US senators introduced a bill that would impose sanctions on vessels used to construct deep sea pipelines for Russian energy export projects, including Nord Stream 2. President Trump last year criticised Germany’s chancellor, Angela Merkel, over the project. The Senate bill has not yet been debated in the full chamber. 

The Russian state gas firm Gazprom and five western energy companies, Uniper, Wintershall, Shell, OMV and Engie, are behind the scheme. The 1,200 kilometre pipeline, two-thirds of which is already in place, also enters the territorial waters of Finland, Sweden and Denmark.

Opponents of the €9.5bn scheme, which include a number of Central and East European countries, have warned it risks deepening reliance on gas imports from Russia, which already provide about 40% of the continent’s consumption.

Specifically, they claim it has been designed to hurt Ukraine by reducing the amount of gas shipped through the country. They also warn that it would give new opportunities for Russia’s continuing campaign of hybrid warfare against the West.

Donald Tusk, the Polish president of the European Council, has called it a “mistake”, while US President Donald Trump, has branded it very inappropriate and a “very bad thing for Nato”.

Any sanctions would be a blow not just for the project but for Russia’s economy, giving fresh impetus to a five year-long sanctions regime against Moscow that has cut off some of its biggest companies from foreign banks and effectively banned many of its most prominent businessmen from doing business in the west.

Gazprom, the Kremlin-controlled energy group behind the pipeline, said Nord Stream 2 was a purely commercial project that would increase energy security for European consumers. 

A Nord Stream 2 spokesman said that no contractor had left the project over the sanctions risk so far. Under current plans, the project is expected to become operational in early 2020.

 


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