Sanctions that could hinder one of Moscow’s most important projects in Europe, the Nord Stream 2 natural gas pipeline, have been included in the annual U.S. defense policy bill, two congressional aides said on Wednesday.
The U.S. is drawing up additional sanctions on the Nord Stream 2 natural gas pipeline project, the latest obstacle in the path of the 9.5 billion-euro ($11.2 billion) Russia-to-Germany link that’s been halted almost a year.
The sanctions in the compromise National Defense Authorization Act between lawmakers in the House and Senate would penalize companies facilitating the construction of the pipeline, including ships helping operations to lay pipelines or moving rock formations on the sea bed. The sanctions also target companies providing insurance or secondary insurance for its construction and certification for the pipeline in Denmark. The bill would become law only after being passed by both chambers in Congress and signed by President Donald Trump.
The rules could inflame tensions between the U.S. and Chancellor Angela Merkel over the project, which would bring gas into northern Germany and help Russia’s state-backed exporter Gazprom PJSC tighten its grip on energy supplies to the region. President Donald Trump, backed by both Republicans and Democrats in Congress, have criticized Europe’s reliance on Russia and offered U.S. cargoes of lique.
By adding insurers and certification companies to face sanctions, the U.S. will make it harder for Gazprom to complete Nord Stream 2, which will run 2,460 kilometers alongside an existing Nord Stream pipeline. Gazprom and its backers including Royal Dutch Shell Group say the pipeline will be needed to meet increasing demand and add flexibility to the system. Opponents say it will allow Russia to choke off flows through Ukraine, the primary route to market for much of Gazprom’s gas.
The sanctions backers hope the measures will prevent Gazprom from using the Akademik Cherskiy, a Russian pipe-laying vessel, to finish a final 99 mile (160 km) stretch of the project in Danish waters.
The bill also includes a provision from Representative Eliot Engel, a Democrat and the leader of House Foreign Affairs, requiring allies to be notified before imposition of sanctions. Engel has opposed the project but has said that sanctions could leave Russia “off the hook” while hitting European companies helping the project.
The new sanctions legislation in the U.S. specifies that previously enacted sanctions apply to all pipe-laying activities and insurance.
Sources: Reuters , Bloomberg