Germany should stick to Nord Stream 2 project - MSC chairman

By Andrea Shalal

BERLIN, Jan 17 (Reuters) - Germany should finish the Russian-backed Nord Stream 2 gas pipeline despite U.S. opposition and growing domestic concerns, but future energy projects should be coordinated by the European Union, a veteran German diplomat said on Thursday.

Wolfgang Ischinger, chairman of the Munich Security Conference, said the initial "birth defect" of the $11 billion project was the fact that European treaties had allowed the German government to deem the project as purely commercial.

In fact, he told reporters, it was clear that such a large project clearly had a political nature, particularly given Russia's annexation of the Crimea region of Ukraine in 2014 and other actions in recent years.

The pipeline, which would carry gas straight to Germany under the Baltic Sea, has been criticised in some quarters because it would deprive Ukraine of lucrative gas transit fees, potentially making Kiev more vulnerable in the future.

Germany and Russia have been at odds since Moscow annexed Crimea, but both countries have a common interest in the pipeline, which will double capacity of the current route.

Russian gas giant Gazprom is building the project jointly with Western partners Uniper (Swiss: UNIPE.SW - news) , Wintershall , Engie (LSE: 0LD0.L - news) , OMV (IOB: 0MKH.IL - news) and Shell (LSE: RDSB.L - news) .

Ischinger cautioned against abandoning the project as it neared its completion date of late 2019, citing German foreign policy's focus on consistency and sustainability. "Saying 'forget it' now would not be good German foreign policy."

The U.S. ambassador in Berlin, Richard Grenell, drew fire this week for telling German companies involved in the project that they could face sanctions if they continued with the plan that is already far advanced.

Germany says U.S. sanctions against Nord Stream 2 would be the wrong way to solve the dispute. (Reporting by Andrea Shalal Editing by Alexandra Hudson)