Thursday

11th Aug 2022

EU bets on US 'consultations' to save Russia pipeline

  • Flagship Russian project to come online in 2019 (Photo: Nord Stream 2 / Axel Schmidt)

EU firms are betting that a non-binding “consultation” process on new US sanctions will stop their investment in a Russian gas pipeline from turning into a fiasco.

Nord Stream 2, a Swiss-based Russian firm that is building the project, said on Thursday (3 August) that “potential sanctions” by the US on EU firms involved in the scheme will “only be implemented in close coordination with European allies”.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Nord Stream 2 said they would “continue” and “proceed” (Photo: Axel Schmidt)

“This ensures that European interests can be taken into account, protecting energy security of European citizens and the freedom of European companies to engage in legitimate economic activities,” it said.

Anglo-Dutch firm Shell, Austrian firm OMV, France’s Engie, and German companies Uniper and Wintershal have each pledged €950 million toward the pipeline.

Nord Stream 2 said they would “continue” and “proceed” with the construction.

It added that US president Donald Trump might never go ahead with the penalties despite having signed a new Russia sanctions bill this week.

“We are analysing the implications of the president’s signing statements, which set the frame for implementation of any potential sanctions,” the Russian firm said.

Congress forced through the sanctions, which threaten fines against investors in Russian energy projects and which restrict Russian arms sales and bank credit, last week.

Trump signed it on Wednesday, but the Russia-friendly US leader said it was “flawed” and that it violated his “exclusive constitutional authority” on foreign policy.

The European Commission, which had threatened to retaliate within “days” if the bill went through, also placed its best on the consultation mechanism.

A Commission spokeswoman, Mina Andreeva, said in Brussels on Thursday that EU lobbying had led Congress to relax its original provisions.

She said it was a “good sign” that the levels of Russian investment in any given energy project that would qualify for US fines had been raised, which meant that they would impact “fewer” schemes of EU interest.

That still left Nord Stream 2 in the crosshairs.

But she added that there was “a clear [US] commitment to consult allies on a case by case basis whenever sanctions are to be imposed” on any “project with European participation that might have an impact on energy diversification”.

She said the EU would consider retaliatory action only if its concerns were ignored.

Nord Stream 2 would concentrate seven out of every 10 drops of Russian gas sold to the EU on the German route.

Its critics, which include Poland and the Baltic and Nordic states, say it would make them more vulnerable to energy blackmail.

The US state department also believes it would reduce Russia’s cost for invading Ukraine and would boost Moscow’s influence in Berlin.

The five big EU firms behind the project are among more than 200 international contractors building the €9.9 billion pipeline, most of which are European.

The Commission had earlier criticised Nord Stream 2 for increasing energy dependence on Russia, but its president, Jean-Claude Juncker has taken Austria and Germany’s side in the outcry on the US measures.

The Commission is also angling to negotiate the legal model that is to apply to the pipeline with Russia, to help to see its anti-monopoly laws applied to the offshore and onshore parts.

A US source told EUobserver that even if the US sanctions were never implemented, they would increase the “risk” and subsequently the cost of Nord Stream 2 construction.

The five EU firms already showed their skittish side by ditching their shares in the Swiss-based Nord Stream 2 consortium when a Polish anti-trsut regulator raised concerns last year.

Magazine

Nord Stream 2: Business unusual

Neither sanctions, EU law nor politics can stop the Nord Stream 2 gas pipeline from being built, its small army of European lobbyists has said.

Markets shun Nord Stream 2 amid US threat

Markets unwilling to lend money to finance the Russia gas pipeline due to risk of US sanctions, forcing its EU backers to "review" their plans.

Opinion

Will EU join new US sanctions on Putin elite?

'Oligarch clause' in new US sanctions on Russia to start life on 29 January - but to what extent will the EU and US coordinate a blacklist of Putin's cronies?

Opinion

Only Western unity can stop Iran hostage-diplomacy

The Belgian parliament's recent decision to ratify its prisoner-exchange treaty with Iran is a grave mistake, and one which exemplifies the many downfalls of dealing with Iran's human-rights abuses on a case-by-case basis.

News in Brief

  1. Sweden overtakes France as EU's top power exporter
  2. Italy's far-right star in European charm offensive
  3. Another migrant tragedy claims 50 lives in Greek waters
  4. Russia hits area near town with 120 rockets, says Ukraine
  5. UN expects more ships to get Ukrainian grain out
  6. Greece to end bailout-era oversight
  7. Denmark to train Ukrainian soldiers in urban warfare
  8. Russian helicopter flies into Estonia's airspace

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  2. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  3. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022
  4. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  5. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  6. Council of the EUEU: new rules on corporate sustainability reporting

Latest News

  1. Russian coal embargo kicks in, as EU energy bills surge
  2. Only Western unity can stop Iran hostage-diplomacy
  3. Kosovo PM warns of renewed conflict with Serbia
  4. EU Commission shrugs off Polish threats on rule-of-law
  5. EU urged to stop issuing tourist visas to Russians
  6. Russia puts EU in nuclear-energy paradox
  7. Almost two-thirds of Europe in danger of drought
  8. West needs to counter Russia in Africa, but how?

Join EUobserver

Support quality EU news

Join us