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. House and Senate negotiators agreed to target insurers and technical certification companies working on the project in a defense bill that must pass by the end of the year, according to three people familiar with the matter. The move would add to penalties that stopped work on the natural gas link under the Baltic Sea just a few weeks before it was to be completed.
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 liquefied natural gas as an alternative.
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.
Who’s Dependent on Russia’s Gas?
Fourteen countries get more than 50% of their gas from Russia
Source: Agency for Cooperation of Energy Regulators, 2017 data
All except 160 kilometers of the link were laid down when Trump imposed sanctions late last year. Those measures prevented AllSeas Group SA from allowing its pipeline-laying ship to set down the last sections of pipe in Danish waters for Gazprom. The new sanctions would prevent ships from getting insurance and technical certifications they require to work offshore Denmark.