The US is preparing to impose sanctions on Russia’s controversial Nord Stream 2 gas pipeline to Germany, the Trump administration’s energy secretary has warned, targeting a project that critics say can be used by the Kremlin as a political weapon.
“The opposition to Nord Stream 2 is still very much alive and well in the United States,” Rick Perry told reporters at a briefing in Kiev during a trip to attend the inauguration of Volodymyr Zelensky, Ukraine’s new president.
“The United States Senate is going to pass a bill, the House is going to approve it, and it is going to go to the president and he is going to sign it, that is going to put sanctions on Nord Stream 2,” he said, in comments published by Reuters.
Opponents of the €9.5bn scheme, which is under construction and will run from Russia to Germany under the Baltic Sea, fear Moscow will use it to increase its control over European energy supplies.
In particular, they claim it has been designed to hurt Ukraine by reducing the amount of gas shipped through the country.
Any sanctions would be a blow not just for the project but for Russia’s economy, giving fresh impetus to a five-year long sanctions regime against Moscow that has cut off some of its biggest companies from foreign banks and in effect banned many of its most prominent businessmen from doing business in the west.
Gazprom, the Kremlin-controlled energy group behind the pipeline, says Nord Stream 2 is a purely commercial project that will increase energy security for European consumers.
Executives close to the project told the FT that while they were concerned about talk of sanctions, they believed Washington would not impose measures but would only ramp up threats to deter western companies from investing in future Russian energy projects.
Bovanenkovo, a 1,000 sq km gasfield 2,200km north of Moscow in Russia’s Arctic, which Gazprom has developed to provide the gas for Nord Stream 2, is already scaling up production ahead of the pipeline’s planned completion at the end of the year.
Ulrich Lissek, head of communications and government relations at Nord Stream 2, said the company was “aware that there is ongoing discussion in the US regarding sanctions against companies involved in Nord Stream 2”.
“We know there is risk. However, we do not expect that any sanctions will be imposed. We of course are in very close contact with companies working for us to follow the situation and if needed to take the necessary decisions,” he said, adding that no contractor had left the project over the sanctions risk.
Mr Perry was speaking a day after meeting Mr Zelensky, who has made clear Kiev will maintain its defiant stance towards Moscow, which annexed Crimea in 2014 and has backed separatists fighting a war in the country’s east.
“I would like to urge you that the United States keeps increasing sanctions against the Russian Federation,” Mr Zelensky told Mr Perry.
The Kremlin said it was confident the pipeline would be completed regardless of US actions.
“The project has been implemented to a large extent, and we are confident that it will be finalised and commissioned to the benefit of gas consumers in Europe,” said Dmitry Peskov, President Vladimir Putin’s spokesman, who described US threats as “nothing but an overt manifestation of unfair competition”.
Additional reporting by Roman Olearchyk in Kiev