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23 Sep, 2020 14:54

Fear of US sanctions spooks insurers into refusing to cover construction of troubled Nord Steam 2

Fear of US sanctions spooks insurers into refusing to cover construction of troubled Nord Steam 2

A large group of shipping insurers will refuse to insure vessels participating in the construction of Nord Stream 2, as companies worry that providing services for builders puts them at risk of violating US sanctions.

The decision made by the thirteen members of the International Group of P&I Clubs, who collectively provide marine liability cover for approximately 90% of the world's ocean-going tonnage, will seriously complicate the pipeline's construction process, which is already 90% complete.

On Monday, a circular sent by the group announced that they would no longer insure "activity involving or related to the Nord Stream 2 or TurkStream construction projects" to ensure that nothing "puts the club in danger of violating sanctions."

Nord Stream 2 is an offshore gas pipeline due to link Russia and Germany, providing Germany with a cheaper source of energy. Due to be launched in mid-2020, construction has been held back by sanctions. According to the US, Nord Stream 2 would "undermine Europe's overall energy security and stability." However, some have accused Washington of opposing the pipeline for economic reasons, as the country looks to increase its export of Liquified Natural Gas (LNG) to the continent.

Discussion around ending Nord Stream 2 picked up in Europe in August, following the poisoning of Alexey Navalny. Earlier this month, MEPs demanded that Germany end the construction of the pipeline, as a means to punish Russia. According to Sergey Naryshkin, the head of Russia's Foreign Intelligence Service (SVR), Navalny has become another excuse to stop Nord Stream 2's construction.