U.S. warns German firms of possible sanctions over Russia pipeline

By Michael Nienaber

BERLIN (Reuters) - The U.S. ambassador to Germany has warned companies involved in the construction of the Russian-led Nord Stream 2 gas pipeline that they could face sanctions if they stick to the project, a senior U.S. official said on Sunday.

U.S. President Donald Trump has accused Germany of being a "captive" of Moscow due to its reliance on Russian energy and urged it to halt work on the $11 billion gas pipeline.

The pipeline, which would carry gas straight to Germany under the Baltic Sea, is also seen critical by other European countries as it would deprive Ukraine of lucrative gas transit fees which could make Kiev more vulnerable in the future.

U.S. Ambassador Richard Grenell addressed the issue in a letter sent to several companies, the U.S. Embassy said.

"The letter reminds that any company operating in the Russian energy export pipeline sector is in danger under CAATSA of U.S. sanctions," the embassy spokesman said, adding that other European states also opposed the planned pipeline.

Germany and other European allies accuse Washington of using its Countering America's Adversaries Through Sanctions Act (CAATSA) to meddle in their foreign and energy policies due to its extraterritorial effect.

Russian gas giant Gazprom is implementing the project jointly with its Western partners - Uniper, Wintershall, Engie, Austria's OMV and Anglo-Dutch group Shell.

The letter raised eyebrows within the German government. A German diplomat said the ambassador's approach did not correspond to common diplomatic practice and that Berlin would address the issue in direct talks with officials in Washington.

An Uniper spokesman declined to comment while no immediate reaction was available from Wintershall.

Germany and Russia have been at odds since Moscow annexed Crimea from Ukraine in 2014. But they have a common interest in the Nord Stream 2 project, which is expected to double the capacity of the existing Nord Stream 1 route.

German newpaper Bild am Sonntag, which was first to report on the letter, said that Grenell was trying to blackmail German companies with the letter. The U.S. Embassy denied this.

"The only thing that could be considered blackmail in this situation would be the Kremlin having leverage over future gas supplies," the embassy spokesman said.

The letter was coordinated in Washington by several U.S. government agencies and "is not meant to be a threat but a clear message of U.S. policy", the spokesman added.

German Foreign Minister Heiko Maas said on Thursday that any U.S. sanctions against Nord Stream 2 would be the wrong way to solve the dispute and that questions of European energy policy had to be decided in Europe, not in the United States.

(Additional reporting by Christina Amann and Tom Kaeckenhoff; Editing by Mark Heinrich)