US expands Nord Stream 2 sanctions guidance

The US Department of State has issued new guidance regarding sanctions against construction of the 55-billion cu m/year Nord Stream 2 natural gas pipeline running between Russia and Germany in the Baltic Sea. Previous sanctions levied under the Protecting Europe’s Energy Security Act of 2019 (PEESA) focused on western vessel and technology providers, prompting Allseas Group SA’s withdrawal from pipelay.

The expanded guidance includes companies “providing services or facilities for upgrades or installation of equipment for [pipelay] vessels” engaged in Nord Stream 2, “or funding for upgrades or installation of equipment for those vessels.” Earlier in 2020 a Russian pipelaying vessel, Fortuna, arrived at Germany’s Mukran port, a logistics hub for Nord Stream 2. Observers have expected Russian state-owned Gazprom to use that ship—which until recently was owned by a subsidiary—and a second vessel (Akademik Cherskiy) to try to finish the pipeline.

PEESA provides the US with authority to advance national security and foreign policy objectives, in particular to address Russian pipeline projects that create risks to US national security, threaten Europe’s energy security, and consequently, endanger Europe’s political and economic welfare. The Department of State and the Department of the Treasury are prepared to use the full range of sanctions authorized to halt construction of these pipelines, the State Department said in the new guidance, published Oct. 20, 2020.

The US will not impose sanctions on persons that the Secretary of State, in consultation with the Secretary of the Treasury, if those persons immediately engage in, and complete within 30 days, a good-faith wind down of such activities upon the issuance of this clarification.

PEESA sanctions still will not apply to persons providing provisions to a relevant vessel if such provisions are intended for the safety and care of the crew aboard the vessel, the protection of human life aboard the vessel, or the maintenance of the vessel to avoid any environmental or other significant damage. PEESA sanctions also will not apply to persons engaging in activities necessary for or related to the repair or maintenance of, or environmental remediation with respect to, Nord Stream 2.