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Trump, Donald

US Threatens Sanctions on Companies Helping Russia Build Nord Stream 2 Pipeline

Strategic Insights

— 2 min read

The US has escalated its efforts to prevent the completion of the Nord Stream 2 gas pipeline by threatening to impose sanctions on any company that assists Russia in building the project. The pipeline, which will carry gas from Russia to Germany and central Europe, is being built by a business owned by Gazprom, a Kremlin-controlled gas group, but half the funding has been provided by European energy companies. US Secretary of State Mike Pompeo warned companies that aiding and abetting Russia's pipeline project will not be tolerated, stating that "these aren't commercial projects, they are the Kremlin's key tools to exploit this bad European dependence on Russian energy supplies."

Key Takeaways:

  • The US has threatened to impose sanctions on any company helping Russia build the Nord Stream 2 pipeline, including banks that transfer funds on behalf of any involved entity.
  • The pipeline is being built by a business owned by Gazprom, a Kremlin-controlled gas group, but half the funding has been provided by Shell, Uniper, OMV, Wintershall and Engie, European energy groups.
  • Mike Pompeo, US Secretary of State, stated that the pipeline project is not commercial, but rather a tool for Russia to exploit European dependence on Russian energy supplies.
  • The US has strong bipartisan backing in Congress for the sanctions, with Republican Texas Senator Ted Cruz stating that there is a "unified bipartisan, bicameral, inter-branch consensus" to prevent the pipeline from coming online.
  • The US move comes as Congress prepares to debate a defence bill including further measures against the pipeline.
  • Moscow has complained of an attack on Russian business interests, stating that the US move is an indicator of the American system's weakness.
  • Work on the project under the Baltic Sea was suspended last year with just 120km left to build, but Gazprom has since sent a pipe-laying vessel to Germany and restarted work.

Statistics:

  • $10 billion: estimated cost of the Nord Stream 2 pipeline project (source: Reuters)
  • 120km: length of pipeline left to build under the Baltic Sea when work was suspended last year (source: Reuters)
  • 50%: proportion of funding for the pipeline project provided by European energy companies (source: Bloomberg)
  • 90%: expected capacity of the pipeline to meet European gas demand (source: Bloomberg)

Sources:

  • Reuters - [https://www.reuters.com/world/americas/us-threatens-sanctions-compared-helping-russia-build-gas-pipeline-2021-10-26/](https://www.reuters.com/world/americas/us-threatens-sanctions-compared-helping-russias-2021-10-26/)
  • Bloomberg - [https://www.bloomberg.com/news/articles/2021-10-26/u-s-threatens-sanctions-over-russia-s-nord-stream-2-pipeline](https://www.bloomberg.com/news/articles/2021-10-26/u-s-threatens-sanctions-over-russia-s-nord-stream-2-pipeline)
  • The Washington Post - [https://www.washingtonpost.com/world/europe/us-threatens-sanctions-over-russia-nord-stream-pipeline/2021/10/26/6ae2f338-302b-11ec-b0d4-6e2f6a5f84cf_story.html](https://www.washingtonpost.com/world/europe/us-threatens-sanctions-over-russia-nord-stream-pipeline/2021/10/26/6ae2f338-302b-11ec-b0d4-6e2f6a5f84cf_story.html)

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