US steps up threats over Nord Stream 2 pipeline

The US has threatened to impose sanctions on any companies helping Russia to build the Nord Stream 2 gas pipeline, as the Trump administration intensified efforts to derail the completion of the Russian energy project.

Nord Stream 2, which will carry gas to Germany and central Europe, is being built by a company owned by Kremlin-controlled gas company Gazprom, but half the funding has been provided by five European energy companies: Shell, Uniper, OMV, Wintershall and Engie.

“It’s a clear warning to companies that aiding and abetting Russia’s malign influence projects will not be tolerated,” Mike Pompeo, the US secretary of state, said on Wednesday. “Get out now, or risk of the consequences.”

The issue has soured relations between Berlin and Washington, as Germany accuses the US of interfering with its energy policy. But the Trump administration, with strong bipartisan backing in Congress, argues that punitive actions are needed to push back against Russia. 

Congress two years ago passed the Countering America’s Adversaries Through Sanctions Act (Caatsa), to try to stop Russia from completing the pipeline. At the time, the state department said loans and investments made before that date would be exempt from sanctions. On Wednesday, however, Mr Pompeo said the Trump administration was removing those protections.

“Let me be clear, these aren’t commercial projects,” he said. “They are the Kremlin’s key tools to exploit this bad European dependence on Russian energy supplies, tools that undermine Ukraine by cutting off gas transiting that critical democracy, a tool that ultimately undermines transatlantic security.”

The move also comes as Congress prepares to debate an annual defence bill that includes further measures to try to derail the gas pipeline.

Ted Cruz, the Republican Texas senator who has been one of the drivers of the effort, said the state department move “again confirms that there is a unified bipartisan, bicameral, inter-branch consensus across the whole of the US government to ensure Putin’s pipeline never comes online”.

Mr Cruz said Congress was also proceeding with a measure to expand the possible range of sanctions related to the Nord Stream project.

Moscow said the US threat was an effort to use political pressure against Russian business interests. Russia has previously vowed to retaliate against any new US sanctions and Gazprom has vowed to complete construction of Nord Stream 2 by itself if Washington forces all its partners to abandon the project.

“This is the use of political pressure for the purpose of unfair competition, an indicator of the American system’s weakness,” said Maria Zakharova, a Russian foreign minister spokesperson.

Moscow has consistently said the pipelines are commercial projects and that the US is seeking to stop their construction to promote its own liquid natural gas exports to European countries as an alternative supply. 

Work on the pipeline under the Baltic Sea was suspended last year with just 120km left to build after the Swiss pipe-laying company Allseas abandoned the project to avoid US sanctions. Gazprom has since sent one of its own pipe-laying vessels to Germany and last week Danish authorities granted the company a permit to restart work.

Heather Conley, a Russia expert at the Center for Strategic and International Studies, said the US move was an effort to step up pressure after previous attempts had only managed to slow down the project.

“The timing is related to Danish authorities granting permission to the Russian contractor to finish laying the pipe. I think they were relying on the Danes to slow things down and sanctions to force contractors to quit,” she said. “Now they are quickly contemplating how to increase the pain and punishment to slow it down.”

One person familiar with the state department move said the change would mean that any company helping the construction, such as companies that fuel the Russian vessel, could be exposing themselves to US sanctions. Banks that transfer funds on behalf of any of the involved entities could also open themselves up to possible exposure.

The remaining section to be laid on the floor of the Baltic Sea lies in Danish territory. Nord Stream 2 had to ask Copenhagen for permission to use Gazprom’s pipe-laying ships, which use anchors to fix to the seabed, instead of the more technically advanced geostationary vessels previously used by Allseas.

Denmark’s energy agency approved that request last Monday, in effect giving the green light for construction to restart using the Russian gas group’s ships. The agency said the decision revolved around the environmental impact of using anchored vessels, and that it approved the request as the area of construction was outside regions where chemical warfare agents were dropped after the second world war.

Analysts estimate that using the less-advanced pipe-layers means it could take around three months for the last remaining section to be laid.

Austrian energy group OMV responded to Mr Pompeo’s statement by saying: “We have the public guidance and we will analyse it.”

Rainer Seele, the company’s German-born chief executive, has previously said that US opposition to the pipeline represented Washington “dictating” energy policy to Europe and called on the EU to defend companies involved in the project.

Shell declined to comment. Wintershall, Engie and Uniper did not respond to requests for comment.