REUTERS

U.S. House and Senate negotiators have reached an agreement to include additional sanctions against a gas pipeline between Russia and Germany in a must-pass defense bill, according to three people familiar with the matter.

The sanctions against Gazprom PJSC's Nord Stream 2 pipeline would target insurance and certification companies that work with Russian vessels on completion of the project. They would be included as part of the 2021 National Defense Authorization Act, which must be passed by the end of the year, Bloomberg reported.

The new sanctions legislation specifies that previously enacted sanctions apply to all pipe-laying activities and insurance.

Read alsoU.S. Department of State expands sanctions against Nord Stream 2At the same time, Germany, as an ally, and public officials within Germany, would not be part of any such sanctions.

Nord Stream 2: Background

The Nord Stream 2 project envisages the construction and operation of two gas pipeline branches with a total throughput capacity of 55 billion cubic meters of natural gas per year from the coast of Russia through the Baltic Sea to Germany. It should connect Russia's Ust-Lug and Germany's Greifswald. This new pipeline bypassing Ukraine is to be built next to the existing Nord Stream 1 pipeline.

The construction of the pipeline was expected to be completed before the end of 2019.

The pipeline will be 1,220 km long. The project is being implemented by Russia's Gazprom in alliance with European companies – ENGIE, OMV, Royal Dutch Shell, Uniper, and Wintershall. Ukraine stands against the construction of Nord Stream 2 as it will most likely lose its status of a gas transit country, while its potential revenue losses are estimated at US$3 billion annually. The project is also highly criticized by the U.S., Poland, and the Baltic States.

On July 15, U.S. Secretary of State Mike Pompeo warned that the participants in the Nord Stream 2 project would fall under the Countering America's Adversaries Through Sanctions Act, CAATSA.

On July 16, the U.S. recommended that investment companies reconsider their participation in the Nord Stream 2 gas pipeline project.

Read alsoPoland supports Ukraine's ambitions as Eastern Europe's transit state – DudaOn July 23, the U.S. Senate approved the draft National Defense Authorization Act for Fiscal Year 2021, which, among other things, contains additional sanctions against the companies involved in the construction of Nord Stream 2.

Ukraine's Foreign Ministry welcomed the United States' readiness to impose sanctions on investment companies involved in the completion of the project.

On October 20, the U.S. Department of State said it expands sanctions against the Nord Stream 2 gas pipeline project.

The Kremlin called the new U.S. sanctions against Nord Stream 2 raider competition.

At the same time, Germany announced Nord Stream 2 would be completed, despite the U.S. position, however there is no exact date for the completion of construction.