A bipartisan group of senators is planning to introduce legislation that would expand U.S. sanctions against Gazprom PJSC's Nord Stream 2 pipeline between Russia and Germany by taking aim at insurance companies that work with Russian vessels on completion of the project.
A draft of the measure obtained by Bloomberg spells out that previously enacted sanctions apply to all pipe-laying activities and insurance. It expands sanctions to companies that provide "underwriting services or insurance or reinsurance" for vessels working on the pipeline as well as those that provide "services or facilities for technology upgrades or installation of welding equipment for, or retrofitting or tethering" of vessels.
The bill, which is expected to be introduced Thursday, would extend sanctions to anyone who provides port facilities to pipe-laying vessels and tethering services.
Bloomberg says Senator Ted Cruz, one of the lead sponsors of the legislation, said the pipeline poses "a critical threat to America's national security and must not be completed." Russian President Vladimir Putin is trying to circumvent the sanctions passed by Congress last year, Cruz said in a statement.
The bill will state that anyone involved in the project in any capacity will "face crippling and immediate American sanctions," Cruz said.
Senator Jeanne Shaheen, a New Hampshire Democrat, said the pipeline "threatens Ukraine, Europe's energy independence and gives Russia an opening to exploit our allies" and that "Congress must once again take decisive action and stand in this pipeline's path."
Shaheen and Cruz last year secured sanctions against the pipeline as part of the 2020 National Defense Authorization Act. After President Donald Trump signed the NDAA into law, AllSeas Group SA stopped work on the pipeline, bringing the project to a halt just weeks before the expected completion. Gazprom, the owner of the pipeline and the gas that's supposed to flow through it, has now moved two Russian vessels into the area to continue work.
The U.S. is seeking to block completion of the project over longstanding concern that additional flows of Russian gas would increase the Kremlin's political leverage over European Union countries. Washington has repeatedly urged Europe to buy more U.S. liquefied natural gas instead.
The Russian government said last year that sanctions would not derail the Nord Stream 2 project.
The two vessels targeted by the sanctions -- the Akademik Cherskiy and Fortuna -- each have some of the tools needed to complete the pipeline but would have to be tethered together to carry out the work, according to a person familiar with the matter. The legislation also includes measures to prevent sanctions evasions by moving the ships from company to company.
As UNIAN reported earlier, the German Federal Network Agency on May 15 refused to exempt Nord Stream 2 from the EU Gas Directive rules. The reason for the refusal is that the project had not been implemented by May 23, which was a condition for its exemption from the restrictive rules.
UNIAN memo. 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, 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 December 20, U.S. President Donald Trump enacted the U.S. defense budget for 2020, which provides, inter alia, sanctions against companies involved in the construction of the Nord Stream 2 and TurkStream pipelines. After that, the Swiss company Allseas suspended participation in the construction of Nord Stream 2.
On December 30, it became known that the company had withdrawn from participation in the project, its ships had already left the Baltic Sea.
On January 11, 2020, Russian President Vladimir Putin said Russia could complete the construction of Nord Stream 2 independently, and the pipeline would start operating, most likely, in the first quarter of 2021.