A Swiss-based insurance company, Zurich Insurance Group AG, has ceased services tied to the Nord Stream 2 gas transit project.

The move is due to the looming threat of U.S. sanctions, Bloomberg reports citing a source close to the issue.

"Zurich's insurance plans cover the construction of the controversial Russia-Germany gas pipeline, the report reads. "The company could potentially be a target of a fresh round of sanctions that'll penalize companies that provide technical certification and insurance to the project, said the people who asked not to be identified as the matter is private."

Read alsoU.S. tells European companies they face sanctions risk on Nord Stream 2 pipeline – mediaThe company is one of the few insurance firms engaged in the project. It has declined to comment "to protect confidentiality," as per Bloomberg.

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.

According to media reports, U.S. President-elect Joe Biden intends to do his best to prevent the construction of Nord Stream 2.

On November 4, 2020, the media reported that Congress wants to expand sanctions against Nord Stream 2 and TurkStream.

On December 4, 2020, German Foreign Minister Heiko Maas said he doubted that the U.S. position on Nord Stream 2 would change after Joe Biden's inauguration.

On December 6, 2020, United States Charge d'Affaires to Germany Robin Quinville called on the EU and Germany to declare a moratorium on the construction of the Nord Stream 2 gas pipeline.

On December 9, 2020, the U.S. House of Representatives approved the 2021 NDAA with expanded restrictions against the Russian Nord Stream 2 gas pipeline.

Norway's risk management and quality assurance firm DNV GL has suspended work on Nord Stream 2 on fears of being sanctioned by the United States.

The prospect of severe U.S. sanctions also led the Danish consulting firm, Rambøll, to withdraw from the controversial gas project.