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4 Jun, 2018 13:01

US about to slap disobedient European firms with sanctions over Russian gas project

US about to slap disobedient European firms with sanctions over Russian gas project

The White House is on the verge of introducing penalties against companies engaged in the construction of the Nord Stream 2 gas pipeline, which will deliver Russian natural gas to the EU across the Baltic Sea.

The US government is planning to sanction European corporations that joined the pipeline project, which is led by Russian state-owned energy giant Gazprom, three sources close to the issue told Foreign Policy news magazine. Apart from Gazprom, the project is being undertaken by German energy firms Wintershall and Uniper, French multinational Engie, British-Dutch oil and gas giant Royal Dutch Shell, and Austrian energy company OMV.

“They will stop at nothing to block Nord Stream,” one of the sources told the media, referring to key figures in the current White House administration.

Initially, Gazprom's European partners were planning to become stakeholders in the Nord Stream 2 AG, which is registered in Switzerland. However, the Office of Competition and Consumer Protection, Poland’s antitrust watchdog, blocked the proposed joint venture between Gazprom and the European firms in 2016.

The challenge was addressed through a financial arrangement. The European partners offered loans for the project instead of creating a joint venture to work in line with legislation and regulators. Gazprom received €2 billion ($2.3 billion) to build a fifth of the pipeline.

The Nord Stream 2 project covers the construction of two threads of a gas pipeline that will run from Russia to the coast of Germany via the Baltic Sea. The controversial pipeline, approved by Germany and Finland, is projected to deliver 55 billion cubic meters of Russian natural gas to European customers every year. It's expected to be put into operation in 2019.

The project was strongly opposed by some European states, including Ukraine, Poland and the Baltic countries. The US has also slammed the pipeline, claiming the project undermines energy security both in Europe and the US.

“Everything is on the table. The administration is taking a whole-of-government approach to stopping the Nord Stream project,” the source said, as cited by the media.

Last summer, Congress approved the so-called Countering America’s Adversaries Through Sanctions Act (CAATSA). The legislation allows the White House to introduce punitive measures against the participants of the energy project, investing over $5 million in those enterprises.

“We have been clear that firms working in the Russian energy export pipeline sector are engaging in a line of business that carries sanctions risk,” a State Department spokeswoman told the media.

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