Firm suspends Nord Stream 2 pipeline work over US sanctions

A company that operates ships laying sections of a new GermanRussian pipeline said Saturday it is suspending the work after U.S. President Donald Trump signed legislation threatening sanctions.

Trump on Friday signed the bill passed earlier this week by the Senate that provides for sanctions against individuals and companies involved with the vessels laying the Nord Stream 2 pipeline under the Baltic Sea from Russia to Germany.

The U.S. has been an outspoken opponent of the pipeline, which will transport natural gas about 1,200 kilometers (750 miles). Along with eastern European countries that also oppose the project, the U.S. government argues that it will increase Europe’s dependence on Russia for energy.

On Saturday, Switzerland-based Allseas, which operates ships laying sections of the undersea pipeline, said in a brief statement that “in anticipation of the enactment of the National Defense Authorization Act (NDAA), Allseas has suspended its Nord Stream 2 pipelay activities.”

The company will “expect guidance comprising of the necessary regulatory, technical and environmental clarifications from the relevant U.S. authority,” it added.

Construction of the pipeline is already well advanced and it wasn’t immediately clear to what extent the U.S. move would hamper its completion. Nord Stream 2 spokesman Jens Mueller said in an emailed statement that “completing the project is essential for European supply security.”

“We together with the companies supporting the project will work on finishing the pipeline as soon as possible,” he added. Nord Stream 2 is owned by Russia’s Gazprom, with investment from several European companies.

The German government said it regretted the enactment of the U.S. legislation.

“The German government rejects such extraterritorial sanctions,” spokeswoman Ulrike Demmer said in a statement. “They affect German and European companies and constitute an interference in our domestic affairs.”

But Richard Grenell, the U.S. ambassador to Germany, said that many European countries, as well as the European Commission and European Parliament, have voiced concerns about Nord Stream 2. He said it has been longstanding U.S. policy to ensure that no one country or source has “undue leverage over Europe.”

“There’s a lot of talk in Germany about being more pro-European and we think that, when it comes to Nord Stream 2, this particular decision on sanctions is an extremely pro-European position,” he said in a telephone interview.

Grenell said the lawmakers who drafted the legislation made it “very much limited in scope, as small as they felt was needed, and we’re very pleased to see Allseas comply with the sanctions.”

In a letter to Allseas’ chief executive dated Wednesday, Republican Senators Ted Cruz and Ron Johnson had warned the company against trying to rush to finish the pipeline before the U.S. takes action.

“The consequences of your company continuing to do the work for even a single day after the President signs the sanctions legislation - would expose your company to crushing and potentially fatal legal and economic sanctions,” they wrote. They said that the company leaving the pipeline unfinished is “the express intention of the sanctions legislation, which we authored.”

Russia’s foreign ministry dismissed U.S. arguments about European energy security. It said there was a “desire to impose American liquefied gas on Europe, which costs it much more than pipeline deliveries from Russia.”

“Russia has realized and continues to realize its economic projects independent of any kind of sanctions,” a ministry statement said.

The German government’s Demmer said the U.S. measures are “particularly incomprehensible” in view of the fact that Russia and Ukraine reached an agreement this week on the future transit of Russian gas through Ukrainian territory.

Ukraine has been one of the countries that opposes Nord Stream 2, in part because it feared being frozen out as a gas transit country as a result of the pipeline’s construction.

While Germany is annoyed by the U.S. move, Chancellor Angela Merkel has made clear that it isn’t considering retaliation against the sanctions. She told lawmakers in Berlin on Wednesday: “I see no alternative to conducting talks, though very firm talks, (to show that) we do not approve of this practice.”