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US threatens to expand sanctions on Nord Stream 2 as Russia moves to complete pipeline

Spirit of Europe Nord Stream Sign Tallinn (Pjotr Mahhonin/WikiCommons)

This article was originally published by Radio Free Europe/Radio Liberty and is reprinted with permission.

The United States has threatened to sanction any individual or company helping Russia build a controversial natural gas pipeline to Germany as the Kremlin moves to complete the last kilometers of the nearly $11 billion project.

“Get out now — or risk the consequences,” U.S. Secretary of State Mike Pompeo said July 15 during a press conference in Washington announcing the new sanction guidelines for the Nord Stream 2 pipeline.

The State Department essentially removed language that excluded the pipeline from the powerful Countering America’s Adversaries Through Sanctions Act (CAATSA), which was passed in 2017.

Unable to use CAATSA, the United States in December passed legislation to sanction any vessel laying underwater pipes for the Nord Stream 2 pipeline, forcing Swiss-based Allseas to quit the project with just about 160 kilometers remaining.

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The pipeline, which consists of two parallel lines running under the Baltic Sea, is a combined 1,230 kilometers in length.

Russia is now trying to use its own vessels to finish Nord Stream 2 after receiving permission from Denmark earlier this month. The unfinished portion of the pipeline lies in Denmark’s economic waters.

However, the Russian ship would still need to use the services of Western companies, such as port facilities and insurance, giving the United States the potential to hamper their efforts.

CAATSA allowed Congress to sanction Russian energy export pipelines but contained guidance put in by Pompeo’s predecessor, Rex Tillerson, that grandfathered in Nord Stream 2 and the second leg of TurkStream, which runs under the Black Sea to Turkey.

Pompeo said the State Department is updating the public guidance for CAATSA authorities to include the two Russian-led projects, which he described as “Kremlin tools” to expand European dependence on Russian energy supplies and undermine Ukraine.

Pompeo is set to visit Denmark on July 22 to discuss the pipeline, among other issues.

Nord Stream 2 would pump up to 55 billion cubic meters of natural gas to Germany annually upon its completion, doubling the European nation’s import of Russian gas.

The project enables Moscow to significantly reduce natural gas shipments through Ukraine, which currently earns billions of dollars annually in transit fees.

“They are winding up and laying the ground for the imposition of additional sanctions if Russia attempts to deploy its pipe-laying vessels,” said Dan Vajdic, an adviser to Ukraine’s state-owned energy firm Naftogaz, which lobbied Washington to impose more sanctions.

The United States is seeking to export more natural gas to Europe while helping Eastern and Central Europe develop the necessary infrastructure to reduce their dependence on Russian oil and gas.

Congress last year approved up to $1 billion in financing for energy infrastructure projects in the region.

James Carafano, a national security and foreign policy fellow at The Heritage Foundation, told a congressional hearing on July 14 that the completion of Nord Stream 2 would destroy the economic rationale for such U.S.-backed projects.

The State Department denied that the threat of new sanctions against Nord Stream 2 and TurkStream are designed to help U.S. exporters of natural gas.