Biden sanctions company building Russia’s Nord Stream 2 pipeline

US State Department spokesman says $11bn natural gas project is now ‘a piece of steel at the bottom of the ocean’.

he logo of the Nord Stream 2 gas pipeline project is seen on a pipe at the Chelyabinsk pipe rolling plant in Chelyabinsk, Russia.
The US and EU are threatening to shut down the Nord Stream 2 gas pipeline project if Russia invades Ukraine [File: Maxim Shemetov/Reuters]

President Joe Biden announced on Wednesday the United States would impose sanctions on the company in charge of building Russia’s Nord Stream 2 gas pipeline, expanding penalties on Moscow after it recognised two breakaway regions in eastern Ukraine.

The sanctions, which target the Nord Stream 2 AG company and its corporate officers, add to pressure on the Baltic Sea project that was designed to double the gas flow capacity from Russia to Germany.

The White House said the sanctions would not affect Gerhard Schroeder, a former German chancellor and a close friend of Putin’s who has headed the shareholders committee of Nord Stream since 2005.

Europe’s most divisive energy project, Nord Stream 2 has not begun operations pending certification by Germany and the European Union.

Germany on Tuesday halted the pipeline, worth $11bn, citing Russia’s actions towards Ukraine. The US and the EU worry the pipeline will increase Europe’s dependence on Russian energy supplies and deny transit fees to Ukraine, host to another Russian gas pipeline.

President Joe Biden hosts a virtual roundtable on securing critical minerals at the White House
US President Joe Biden has promised tough economic sanctions on Russia if it invades Ukraine [Kevin Lamarque/Reuters]

Biden said in a statement his administration has been closely coordinating Nord Stream 2 action with Germany, adding: “Today, I have directed my administration to impose sanctions on Nord Stream 2 AG and its corporate officers.”

“These steps are another piece of our initial tranche of sanctions in response to Russia’s actions in Ukraine. As I have made clear, we will not hesitate to take further steps if Russia continues to escalate,” Biden also said.

A US State Department spokesman said the US move makes the pipeline “no longer part of the equation” in negotiating with Russia.

“That is now an $11bn prize project that is a piece of steel at the bottom of the ocean,” Ned Price said on Wednesday.

Nord Stream 2 AG is a registered Swiss firm whose parent company is the Russian state-owned gas giant Gazprom.

Gazprom owns the entire pipeline but paid half the costs, with the rest shared by Shell, Austria’s OMV, France’s Engie and Germany’s Uniper and Wintershall DEA.

Ukraine President Volodymyr Zelenskyy last year opposed the completion of the Nord Stream 2 project, warning it could become a “dangerous geopolitical weapon”.

Ukraine on Wednesday declared a state of emergency as Russia massed heavy military forces on its border and moved tanks and troops into two breakaway eastern provinces. US officials continued to warn of a potential full-scale invasion of Ukraine.

“Predicting what might be the next step of Russia, the separatists, or the personal decisions of the Russian president – I cannot say,” Ukraine’s President Volodymyr Zelenskyy said.

The websites of Ukraine’s government, foreign ministry, and state security service were down on Wednesday in what the government said was another massive, denial-of-service cyber attack.

The geopolitical uncertainty and growing volley of sanctions on Russian interests by Washington and its allies have jolted financial markets, from oil and shares to wheat.

Source: Reuters