US senators move to tighten sanctions on Nord Stream 2 and Turkish Stream

Flags wave outside of the Russian Gazprom company's headquarters in Moscow, Russia, 21 January 2020. [Maxim Shipenkov/EPA/EFE]

US senators announced a bill on Thursday (4 June) expanding sanctions on Russia’s Nord Stream 2 and Turkish Stream natural gas pipelines and targeting the projects Washington says will boost Moscow’s economic and political influence in Germany and other European countries.

The Protecting Europe’s Energy Security Clarification Act follows legislation signed by President Donald Trump last year, which prompted Swiss-Dutch company Allseas to halt undersea work, delaying the project.

Bill sanctioning Nord Stream 2, Turkish Stream goes to White House, Russia cries foul

US sanctions against the Nord Stream 2 gas pipeline project are a breach of international law and an example of unfair competition, Kremlin spokesman Dmitry Peskov said on Wednesday (18 December).

Two Russian-owned pipe-laying vessels may now finish the remaining 100 miles (160 km) of the project, which is led by state-run Gazprom. The pipeline could be launched by late 2020 or early next year, Russian President Vladimir Putin has said.

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The Russians have sent their only pipe-laying vessel equipped with dynamic positioning system – Akademik Cherskiy – to Europe. But can the tiny ship without previous experience in pipe-laying do the job, Mateusz Kubiak ponders.

The new bipartisan legislation, spearheaded by Senators Ted Cruz, a Republican, and Jeanne Shaheen, a Democrat, could stop the Nord Stream 2 project by expanding sanctions to include penalties on parties involved in pipe-laying activities and parties providing underwriting services, insurance or reinsurance on the project.

It is less clear what the impact could be on TurkStream or Turkish Stream, the gas pipeline bringing Russian gas to the European territory of Turkey across the Black Sea. From Turkey, the pipeline continues under the name “Balkan Stream” to Bulgaria, Serbia, Hungary and Austria.

Cruz said it “makes clear those involved with vessels installing the pipeline will face crippling and immediate sanctions.”

Shaheen said the pipeline threatens Ukraine and Europe’s energy independence and “gives Russia an opening to exploit our allies.”

The bill must be passed by both chambers of Congress and signed by Trump. It adds sanctions on companies providing services or facilities for the vessels, including welding equipment, retrofitting or tethering of the ships.

Many politicians and energy companies in Germany support Nord Stream 2 as Europe’s biggest economy seeks to end the use of coal and nuclear power.

The Trump administration has touted exports of US liquefied natural gas (LNG) as an alternative to Russian supplies, calling it “freedom gas.” US LNG producers are struggling due to sagging global demand.

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Nord Stream 2 spokesperson Jens Mueller said European households and industries will pay “billions more” for gas if the pipeline is not built. “Decisions about European Union energy policy should be left to Europeans,” Mueller said.

German Economy Minister Peter Altmaier criticized Washington last week for “escalating this sanctions threat, which is extraterritorial and thus in conflict with international law.”

The pipe-laying ship Academic Cherskiy, which Moscow could use to finish Nord Stream 2, changed ownership from Gazprom Fleet to regional firm STIF, a Russian registry showed this week.

STIF was linked to a group of Gazprom companies as of 1 April but there was no data on STIF’s ownership since then, Gazprom spokesman Sergei Kupriyanov told Reuters.

The Academic Cherskiy is moored near Germany’s Mukran port in the Baltic, the staging area for the pipeline’s construction, Refinitiv Eikon data showed.

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