U.S. sanctions will delay, raise costs of Nord Stream two pipeline- German conservative

BERLIN (Reuters) - U.S. sanctions on companies building a pipeline to boost Russian gas supplies to Europe will delay the completion of the project by several months and increase its cost, a member of German Chancellor Angela Merkel's conservatives said on Monday.

The group behind Nord Stream 2 has said it aims to complete the project seeking to double gas capacity along the northern Nord Stream pipeline route to Germany as soon as possible after U.S. sanctions prompted a contractor to suspend pipe-laying.

The United States, which is seeking to sell more of its own liquefied natural gas to European states, says Nord Stream 2 will make Europe too reliant on Russian supplies.

"The sanctions will temporarily delay completion of the Nord Stream 2 pipeline," conservative lawmaker Peter Beyer told German public radio. "But I believe that in the second half of next year the pipeline will be completed."

The Nord Stream 2 pipeline, which will run along the Baltic Sea floor, was expected to start up in the first half of 2020.

"There are alternatives, which will bring with them delays as well as higher costs," said Beyer.

Merkel has condemned the decision but said her government would not retaliate against Trump's sanctions.

Russian Foreign Minister Sergei Lavrov said on Sunday that the pipeline would be launched despite U.S. sanctions and that Russia would respond.

Gazprom <GAZP.MM>, Russia's state-controlled gas giant and a major backer of Nord Stream 2, already supplies more than a third of Europe's gas needs.

Nord Stream 2 will help Russia bypass Ukraine, the main route for Russian gas. The two neighbouring countries, which are locked in military conflict that followed Russia's annexation of Crimea in 2014, agreed a new transit deal this week.

Nord Stream 2 contractor, Swiss-Dutch company Allseas, announced on Friday it had suspended pipe-laying activities.

Other partners in Nord Stream 2 are Austria's OMV <OMVV.VI>, the German firms Uniper <UN01.DE> and Wintershall <BASFn.DE>, Anglo-Dutch energy major Royal Dutch Shell <RDSa.L> and France's Engie <ENGIE.PA>.

(Writing by Joseph Nasr, editing by Louise Heavens)