“Time to get out”: BASF, Shell, OMV & Co: US government increases sanction pressure on companies at Nord Stream 2 | message
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“This pipeline will not take place,” said a high-ranking US government representative from the dpa news agency in Washington. “This is what a dying pipeline looks like.” The government has identified a number of companies and people who face the first punitive measures under the Sanctions Act against Nord Stream 2.
Those affected are currently being contacted and informed about the impending sanctions. “The US does not want to have to impose sanctions on European companies. We are making these calls to warn them and to give them time to get out,” said the government official. The handling of activities in connection with Nord Stream 2 is not subject to sanctions.
“Instead of putting more money into the Nord Stream 2 pipeline and related activities, companies would be better off using force majeure clauses to reverse their stake in Nord Stream 2,” said the government official. He did not provide any information on which companies would specifically be contacted. He called Nord Stream 2 “a geopolitical project that Russia will use to blackmail European countries”.
The US argues that Germany would be dependent on Moscow with the pipeline. The US Congress passed the “Law to Protect Europe’s Energy Security” (Peesa) with bipartisan support last December. Despite sharp criticism from Germany and Russia, the US President had Donald Trump the law came into effect on December 20th. The sanctions were aimed at the operating companies of the special ships that laid the pipes for the pipeline.
Construction was initially stopped by Peesa. The Swiss company Allseas, which had laid pipes in the Baltic Sea with special ships, stopped work at the end of last year because of the impending US sanctions. According to the Nord Stream 2 operator consortium, 2,300 of the 2,460-kilometer gas pipeline from Russia to Germany had already been laid at that time.
The US government official said the cost of the delay meant that the consortium of operators was faced with a choice “either to go to Moscow for a bailout or to ask for additional money from creditors, and in recent months we’ve had commitments from current creditors received that there will be no additional or new funding “. A spokesman for Nord Stream 2 said the shareholders and the five financial investors, as well as the suppliers, stand by the project. The costs of delays and threats of sanctions are currently not quantifiable.
The Russian GAZPROM group is formally the sole shareholder of Nord Stream 2 AG, based in Zug, Switzerland. In addition, the German groups Wintershall Dea – a joint venture between BASF and LetterOne – and Uniper (a spin-off from E.ON) as well as the Dutch-British Shell, Engie from France and OMV from Austria are added as “supporters”. Nord Stream supervisory board chairman is former chancellor Gerhard Schröder (SPD), at Nord Stream 2 he is chairman of the board of directors.
Uniper noted “with regret that the US continues to try to undermine an important infrastructure project with Nord Stream 2 that we believe is necessary for Europe’s energy security”. This is a clear interference with European sovereignty. “Germany has reaffirmed its political support for Nord Stream 2 in view of its role in security of supply,” said a statement from Uniper.
Wintershall Dea said on request: “We have not received any warning from the US government.” The four European partners have pledged to finance half of the total costs estimated at 9.5 billion euros in the long term. For each company that is up to 950 million euros. “Wintershall Dea had paid out 730 million euros by April 2020,” it said.
Russian President Wladimir Putin had announced after the imposition of US sanctions that it would complete the work independently
– independent of foreign partners. Also the operator consortium
had emphasized that he wanted to complete the pipeline. The Russian laying ship “Akademik Tscherski” was supposed to complete the project.
In October, the US State Department published new guidelines, according to which the provision of certain services and facilities for the laying vessels could also be penalized. The US government official said a first government report would be presented to Congress in the next few days or weeks. It would name people and companies who potentially violate the law.
So far, no sanctions have been imposed under Peesa. Several US senators wrote in a letter in August threatening the German Baltic port of Sassnitz-Mukran with sanctions. According to the website marinetraffic.com, the “Akademik Tscherski” is located there.
As part of the 2021 Defense Budget (NDAA) package, a law is to be passed to tighten sanctions. According to this law (Peesca), companies that provide ships for other activities related to laying work are also to be penalized. This could include digging trenches for the pipeline.
Companies that insure affected ships or make their port facilities available to them are also threatened with sanctions. The same goes for companies that certify the pipeline so that it can go live.
After the sanctions that have already been imposed, but also after the planned sanctions, persons concerned may be banned from entering the USA. Any data subject or company property in the United States can be frozen.
The US government official emphasized that supporters of Nord Stream 2 should not have hopes of a change of government in Washington. He pointed out that both Peesa and Peesca receive bipartisan support and provide for mandatory sanctions. “That means that the sanctions will be implemented regardless of who sits in the Oval Office.”
There is a headwind to the action in Washington from German politics. “The tough work and threats of sanctions from US government representatives are completely inappropriate in tone and in the matter,” said the deputy chairman of the SPD parliamentary group, Achim Post. “Germany and Europe’s energy supply is not decided in Washington or Moscow, but in Berlin and Brussels.” It is now important to seek an exchange with the new US administration as early as possible in order to avert further escalation.
The new US President will be sworn in on January 20th. After the November 3rd election, Democrat Joe Biden was declared the winner. Trump has so far refused to admit defeat. Trump is a bitter opponent of Nord Stream 2. Biden is also critical of the project. Still taking in his previous role as US Vice President Barack Obama Biden had called the pipeline “a fundamentally bad deal for Europe”.
Independently of Congress, the US government extended the Caatsa sanctions law (“Countering America’s Adversaries through Sanctions”) to Nord Stream 2 last July. It enables the US President “in coordination with allies of the United States” to impose sanctions on persons or companies that invest in, or contribute to the construction, modernization or repair of Russian pipelines. US Secretary of State Mike Pompeo spoke at the time of a clear warning to companies that aided in projects that expanded Russia’s “malicious influence”.
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