German Chancellor Angela Merkel has reportedly criticised US sanctions on companies constructing the Nord Stream-2 gas pipeline from Russia to Germany but noted that Berlin is not planning to impose counter-sanctions.
“I see no other option but to talk … we do not approve of this practice of extraterritorial sanctions,” she told German lawmakers on 18 December referring to legislation passed by the US Senate a day earlier.
The sponsors of the Protecting Europe’s Energy Security Act of 2019 (PEESA) – filed on May 14, 2019 by Senators Ted Cruz, John Barrasso, and Tom Cotton, the so-called anti-Nord Stream-2 – bill managed to have some elements of that bill added to the big US Defense NDAA bill, the US National Defense Authorization Act,” Chris Weafer, co-founder of Macro-Advisory in Moscow, wrote in a note to investors on 19 December. “But the action is too late and while further complicating the project, that will only mean a delay rather than a suspension,” he added.
Weafer said tougher measures are expected. “There is already speculation in Washington that this amendment may be followed with a tough bill targeting the use of the pipeline and, possibly, the end use of the gas,” he said, adding that whether that succeeds or fails may depend on how angry Berlin is over the measure and what countermeasures it is prepared to put in place.
Germany’s Foreign Minister Heiko Maas reportedly called sanctions unacceptable, adding that European energy policy is decided in Europe, not in Washington.
Senator Cruz tweeted on 18 December that he and Senator Ron Johnson put Nord Stream-2 pipelayer Allseas on formal legal notice. When US President Donald J. Trump signs into law the NDAA and Cruz’s bill to stop the pipeline, “Allseas risks crippling sanctions,” Cruz wrote.
Nord Stream-2 would not comment on US sanctions. “As far as the legislation on sanctions in the US is concerned, it is an ongoing procedure on which are not in the position to comment on,” Nord Stream-2 representative Sebastian Sass told New Europe on 19 December.
Currently the Nord Stream-2 pipeline is 80% completed and work has already started in the Danish section after the government in Copenhagen granted approval in late October. Further progress will be slow, irrespective of the sanctions, through the winter months due to weather conditions and environment regulations. Russia’s Energy Minister Alexander Novak said recently that he remains confident the pipeline will be operational “no later than mid-2020”.
Ukrainian gas transit talks
The Nord Stream-2 pipeline is spearheaded by Russian gas monopoly Gazprom and bypasses Ukraine, which relies on transit fees for the supply of Russian gas to Europe.
On 19 December, high-ranking officials from Russia, Ukraine and the European Commission are meeting in Berlin for another round of trilateral political gas talks.
Russian President Vladimir Putin said on 19 December during his annual marathon press conference that Moscow planned to keep gas transit via Ukraine despite of the Russian-backed pipelines bypassing the former Soviet republic. “We will look for a solution that is acceptable for all parties, including Ukraine. That’s despite the construction of infrastructure such as Nord Stream-1, Nord Stream-2, TurkStream. We will preserve gas transit through Ukraine,” Reuters quoted him as saying.
The US is looking to decrease Europe’s reliance on Russian gas and at the same time increase exports of US liquified natural gas (LNG) to Europe. The European Energy Security and Diversification Act was passed by the House on 17 December as part of a spending deal to avoid a government shutdown. “In the budget is the European Energy Security and Diversification Act, legislation I wrote to create a $1 billion fund to finance energy projects that make Europe independent of Russian oil and gas,” US Senator Chris Murphy wrote in a tweet on 17 December. “An example of how non-military tools can advance national security,” he added.
Sanctions could push Germany into buying more US LNG but some politicians have proposed to stop public funding for LNG projects in response to US sanctions, which could undermine the European Commission’s strategy for liquefied natural gas.
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