UK markets open in 5 hours 58 minutes
  • NIKKEI 225

    -5.64 (-0.02%)

    +109.25 (+0.50%)

    +0.11 (+0.14%)

    +2.20 (+0.11%)
  • DOW

    -260.99 (-0.77%)

    -752.77 (-3.91%)
  • CMC Crypto 200

    -19.28 (-3.58%)
  • ^IXIC

    -227.90 (-1.96%)
  • ^FTAS

    +6.19 (+0.15%)

US threatens sanctions on Nord Stream 2 pipeline investors

12 May 2020, Mecklenburg-Western Pomerania, Sassnitz: The Russian laying ship "Akademik Tscherski" lies in front of the chalk cliffs of the island of Rügen. Barely five months after the construction stop on the Nord Stream 2 Baltic Sea pipeline, the Russian pipe-laying ship has reached the Baltic Sea off the island of Rügen. Photo: Stefan Sauer/dpa-Zentralbild/dpa (Photo by Stefan Sauer/picture alliance via Getty Images)
Russian laying ship in Baltic Sea in front of the cliffs of the island of Rügen, Germany. Photo: Stefan Sauer/Picture Alliance via Getty

US secretary of state Mike Pompeo warned on Wednesday that Washington would punish companies and investors involved in the Russia-owned Nord Stream 2 natural gas pipeline with sanctions.

"It’s a clear warning to companies – aiding and abetting Russia’s malign influence projects will not be tolerated,” Pompeo said. “Get out now or risk the consequences.”

He warned that those involved in the project could now face sanctions under a revision to the US’s 2017 CAATSA (Countering America’s Adversaries through Sanctions) law.

The 1,200 km (745-mile) pipeline will cost around €10bn (£9bn, $11.4bn) and run from Russia under the Baltic Sea to surface in Germany. Russian state energy firm Gazprom is the main owner of the pipeline; co-financing companies include Wintershall, Uniper (UN01.DE), and Royal Dutch Shell (RDS-A).

The pipeline has been a major issue for US president Donald Trump since he took office. He has constantly accused Germany and the EU of risking becoming dangerously dependent on Russia for energy, though it is frequently pointed out that he is keen for EU countries to buy more American liquified gas. Germany has staunchly resisted calls to halt the project.

Towards the end of 2019, Trump gave the go-ahead for sanctions to be imposed on companies involved, mainly on those laying the pipes, and work stopped in December.

However, earlier this month Denmark gave the Nord Stream 2 company permission to lay the final stretch of the gas pipeline in Danish waters towards Germany. Only about 120km is left to complete.

"There is reason to suspect that Washington primarily wants to sell its own gas in western Europe," Peter Beyer, the German government‘s transatlantic coordinator said. He added that the pipeline is also nearly completed and it would make no sense to let it now rot in the sea.

At a hearing in the German parliament earlier this month, lawmakers slammed the expanded US sanctions. Michael Harms, the head of the German Eastern Business Association, said the new sanctions could affect 120 companies from 12 European states, and many would feel forced to pull out.

“We’re talking about direct and grave interference in Germany and Europe’s sovereignty and energy policy,” said Niels Annen, minister of state in Germany’s foreign ministry.