European companies on Russian Nord Stream 2 pipeline project at risk of U.S. sanctions

According to two sources familiar with the matter at hand, the U.S. State Department has informed European companies that those helping to build Russia’s Nord Stream 2 gas pipeline face sanction risks.

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

The State Department is likely to issue a report either on Thursday or Friday on the companies it believes are helping the Russia-to-Germany pipeline. Companies in the report include those providing insurance, verifying the project’s construction equipment, or helping to lay the undersea pipeline said the source. Unless they stop their work in the project, these companies are at risk of U.S. sanctions.

According to a source, Zurich Insurance Group could be listed in the report.

Zurich Insurance Group did not immediately respond to requests for comments.

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

Russia’s Nord Stream 2 project, will deprive Ukraine of lucrative transit fees and would boost the Russian economic giving it economic and politic leverage over Europe. The U.S. Administration has also pushed exports of U.S. liquefied natural gas to Europe, a fuel that competes with pipelined gas from Russia.

According to the Kremlin, the Nord Stream 2, led by state energy company Gazprom, is a commercial project.

According to Germany, Europe’s biggest economy, the pipeline is a commercial project. Germany needs gas as it closes down polluting coal and nuclear plants on environmental and safety concerns.

Earlier when U.S. President-elect Joe Biden was vice president under the Obama Administration, he was opposed to the project. It is to be seen whether he would be willing to compromise on the project after January 20 when he takes over as President.

According to a U.S. based industry source, who has seen the State Department communications, European companies, including German ones, had received inquiries from the Trump Administration over the past several months, dating back to October 2020, about their activities relating to Nord Stream 2.

In October, the U.S. State Department had asked these companies if they were involved with Nord Stream 2, the value of any services or support and whether they continued work on the project after July 15. In October, U.S. Secretary of State Mike Pompeo had warned investors in Russia’s Nord Stream 2 and Turkstream pipelines, that they could face sanctions under the 2017 Countering America’s Adversaries Through Sanctions Act.

The State Department did not immediately respond to a request for comment.

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