US sanctions block hurry-up work on Russian gas pipeline

Any companies that rush to finish building a Russian natural gas export pipeline to Germany that came under U.S. sanctions this month risk being penalized, senior U.S. officials said.

President Donald Trump signed a bill late this month imposing sanctions on the Nord Stream 2 gas pipeline project led by Gazprom (GAZP.MM), Russia's statecontrolled gas company. The project aims to send gas under the Baltic Sea, bypassing Ukraine and doubling the capacity of the existing line.

The threat of sanctions blocking access to the U.S. financial system forced Allseas, a Swiss-Dutch company that lays deep-sea pipe, to suspend work on the project. All but a 100-mile (160-km) stretch remains to be completed.

That short distance and a 30-day "wind-down" period of work stipulated in sanctions, have led to speculation that the pipeline would be finished soon. But the senior U.S. officials, who spoke on condition of anonymity, rejected the notion that the "good-faith" wind-down period granted companies time to rush to finish Nord Stream 2.

"Good faith wouldn't be hurrying up to lay pipe," one official said. "Sanctions will be imposed unless they demonstrate goodfaith efforts," showing they are pulling out, another official said, adding that the point of the sanctions, spearheaded by Senator Ted Cruz, a Republican from energy-producing Texas, and Senator Jeanne Shaheen, a New Hampshire Democrat, is to stop the project.

Since the Obama administration, Washington has opposed the project on the grounds it would strengthen Russian President Vladimir Putin's economic and political grip over Europe. Russia has cut deliveries of the fuel to Ukraine and other parts of Europe in recent winters during pricing disputes.

The Trump administration has touted U.S. liquefied natural gas as "freedom gas" that gives Europe an alternative to Russian supply. U.S. exports of natural gas spiked more than 60% in 2019, but there are also concerns that a glut could weaken demand.