U.S. tells European companies they face sanctions risk on Nord Stream 2 pipeline / REUTERS

The U.S. State Department this month told European companies which it suspects are helping to build Russia's Nord Stream 2 gas pipeline that they face the risk of sanctions as the outgoing Trump administration prepares a final round of punitive measures against the project, two sources said on Tuesday.

"We are trying to inform companies of the risk and urge them to pull out before it's too late," a U.S. government source said on condition of anonymity, Reuters reported.

The U.S. source said the State Department is expected to issue a report by Thursday or Friday on companies it believes are helping the Russia-to-Germany pipeline. Companies that could be in the report include ones providing insurance, helping to lay the undersea pipeline, or verify the project's construction equipment, the source said.

The companies could be at risk of U.S. sanctions under existing law if they do not stop work.

Read alsoFund created in Germany to support Nord Stream 2 completionZurich Insurance Group could be listed in the report, the source said. The company did not immediately respond to a request for comment.

Nord Stream 2 did not immediately respond to a request for comment.

The US$11 billion pipeline, one of Russia's most important projects in Europe, has sparked tensions between Washington and Moscow.

The Trump administration opposes Nord Stream 2, which would deprive Ukraine of lucrative transit fees, saying it would increase Russia's economic and political leverage over Europe. The administration has also pushed exports of U.S. liquefied natural gas to Europe, a fuel that competes with pipelined gas from Russia.

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.