U.S. preparing new sanctions to impede Russia's Nord Stream 2 pipeline
23/12/2020 18:09
By Andrea Shalal
WASHINGTON, Dec 23 (Reuters) - The United States is urging
European allies and private companies to halt work that could
help build the Nord Stream 2 natural gas pipeline and is
preparing wider sanctions on the Russian project in coming
weeks, senior Trump administration officials said on Wednesday.
The outgoing Trump administration is readying a fresh round
of congressionally mandated sanctions "in the very near future"
that it believes could deal a fatal blow to the
Russia-to-Germany project led by state gas company Gazprom
GAZP.MM , three officials said.
"We've been getting body blow on body blow to this, and now
we're in the process of driving a stake through the project
heart," said one of the officials, who spoke to Reuters on the
condition of anonymity.
Russia this month resumed building the $11.6 billion (9.5
billion euro) pipeline, which is 90% complete, after a one-year
pause prompted by existing U.S. sanctions.
New work has been centered on a 2.6 kilometer (1.6 mile)
stretch in shallow waters of Germany’s Exclusive Economic Zone
but not yet in the deep-water sections off Denmark that comprise
most of the unfinished 100-km stretch. urn:newsml:reuters.com:*:nL1N2IR19L
Washington says the project, which will increase European
reliance on Russian gas, will compromise European energy
security. Russia says the sanctions amount to "unfair
competition" aimed at helping U.S. liquefied natural gas
producers, and insists it will finish the pipeline. urn:newsml:reuters.com:*:nR4N2IO036
The feud may not die down once President-elect Joe Biden
takes office on Jan. 20, foreign diplomats say.
The U.S. pressure campaign on Nord Stream 2 is backed by
both Democratic and Republican lawmakers who fear it will bypass
Ukraine, robbing it of lucrative transit fees. Biden described
the pipeline as a "bad deal" for Europe in 2016, and has
criticized Moscow for its alleged role in a massive cyber attack
on U.S. government agencies that was discovered last week.
Nord Stream 2 did not immediately comment on the possibility
of new sanctions. Last month it told Reuters that existing
sanctions and new ones in the defense policy bill would, if
imposed, directly or indirectly hit more than 120 companies from
more than 12 European countries.
SHIP IN CANARY ISLANDS
Gazprom has had to retool its ships to do the delicate
deepwater pipelaying and may need the help of companies from
other countries to finish the project quickly.
Washington has what it considers "reliable information"
about modifications being carried out to the Oceanic 5000, a
crane ship, in Spain's Canary Islands, upgrades that U.S.
officials say will equip the ship to lay pipe in deep water.
The officials declined to identify which entities could face
sanctions for the previously unreported work, but said they were
not targeting specific governments or government officials.
Several European entities were involved, but some were
"unwitting" of the implications for the pipeline, said one
official, adding they could still escape sanctions if they made
"a good faith effort to unwind their involvement."
A Danish regulator on Tuesday said a Gazprom vessel called
Fortuna would start work off Denmark from Jan. 15 with the
assistance of other supply vessels. urn:newsml:reuters.com:*:nL1N2J30ET
The project is grappling with financial pressures and the
departure of key participants, including Norway’s risk
management and quality assurance firm DNV GL https://www.reuters.com/article/nordstream-norway/norways-dnv-gl-suspends-nord-stream-2-work-over-u-s-sanctions-fear-idUSL1N2IC14F
last month. The State Department is due to issue an overdue
report to Congress in the next weeks on companies that could be
at risk for helping the project, another official said.
DNV said new U.S. guidelines meant it could face sanctions.
The scope of the sanctions were expanded further in a veto-proof
bipartisan defense policy bill passed this month. urn:newsml:reuters.com:*:nL1N2IR19L
That measure would also target individuals or companies
assisting Gazprom with “pipelaying activities,” insurance, and
verification of construction equipment.
U.S. sanctions have already added $1 billion in extra cost
to the project, said one of the U.S. officials.
Initially slated to become operational in late 2020 or early
2021, Nord Stream 2 would double the capacity of Russia to carry
gas directly to Germany.
(Reporting by Andrea Shalal; additional reporting by Timothy
Gardner;
Editing by Mary Milliken and Alistair Bell)
((andrea.shalal@tr.com; +1 202-815-7432;))