By Timothy Gardner and Daphne Psaledakis
WASHINGTON (Reuters) – The United States on Tuesday imposed sanctions on a ship involved in building the Nord Stream 2 pipeline to take Russian natural gas to Europe, as the Trump administration sought to raise pressure on the project on its last full day in office.
The U.S. Treasury Department said it imposed the sanctions on the Russian pipe-laying ship “Fortuna” and its owner, KVT-RUS, under the Countering America’s Adversaries Through Sanctions Act (CAATSA).
Nord Stream 2, designed to double the capacity of the existing Nord Stream undersea gas pipeline, would take gas to Europe via Germany, bypassing Ukraine, which would deprive Kiev of lucrative transit fees.
The project is a rising point of contention between Moscow and Washington. The United States, eager to sell Europe more exports of liquefied natural gas, says Nord Stream 2 would increase Russia’s economic and political leverage over Europe. Moscow and Germany say it is a commercial project.
“The United States is not afraid to hold accountable those who continue to aid and abet this tool of Russian coercion,” U.S. Secretary of State Mike Pompeo said in a statement.
The State Department said it would consider further actions in the near term, under CAATSA and under new sanctions expanded in the annual defense policy bill.
Hours before the official announcement, Kremlin spokesman Dmitry Peskov told reporters the project was under “unlawful” U.S. pressure and that the Kremlin was closely watching developments in order to ensure the pipeline’s completion.
U.S. President-elect Joe Biden, who will replace President Donald Trump on Wednesday, has opposed Nord Stream 2 in the past, but it is unclear whether he could compromise on the issue after taking office on Wednesday.
Germany, which wants gas as it weans itself off nuclear and coal-fired power plants, was disappointed by the move. “We’re taking note of the announcement with regret,” the Economy Ministry spokesman said in Berlin on Monday, after Washington gave Berlin early word of the sanctions.
RISKS OF BEING SCRAPPED
Russia’s state-owned gas giant Gazprom leads the $11 billion project with Western partners Uniper, Wintershall, Engie, OMV and Shell.
Gazprom acknowledged in a Eurobond prospectus seen by Reuters on Tuesday that there are risks the project may be suspended or scrapped amid political pressure.
Gazprom suspended work on the pipeline in late 2019 after the main pipe-laying company, Allseas, dropped out after Trump signed other sanctions.
Work resumed last month when a small 1.6 mile (2.6 km) stretch of the pipeline was built in German waters.
More than 90% of the project has been completed, but more than 62 miles (100 km) of pipeline must still be laid in deep waters off Denmark in an area that requires highly-specialized construction equipment.
According to Refinitiv ship-tracking data, the Fortuna is still anchored in the Baltic Sea near Rostock in northern Germany.
(Reporting by Timothy Gardner and Daphne Psaledakis; Editing by Alistair Bell and Mark Heinrich)
