The United States imposes sanctions on a company building the Nord Stream 2 pipeline in Russia

WASHINGTON (Reuters) – The United States on Wednesday imposed sanctions on the company behind Russia’s Nord Stream 2 gas pipeline, and expanded sanctions against Moscow after it recognized two breakaway regions in eastern Ukraine.

Sanctions targeting Nord Stream 2 AG and its CEO Matthias Warnig are increasing pressure on the Baltic Sea project, which is designed to double gas flow capacity from Russia to Germany.

Europe’s most contentious energy project, Nord Stream 2 has yet to start operations pending certification from Germany and the European Union.

Germany on Tuesday halted the $11 billion pipeline, citing Russia’s actions toward Ukraine. The United States and the European Union are concerned that the pipeline will increase Europe’s dependence on Russian energy supplies and prevent transit fees to Ukraine, which hosts another Russian gas pipeline.

In a statement on Wednesday, US President Joe Biden said his administration was closely coordinating Nord Stream 2’s action with Germany, adding: “Today, I directed my administration to impose sanctions on Nord Stream 2 AG and corporate employees.”

“These steps are another part of the initial tranche of sanctions in response to Russia’s actions in Ukraine. As I have made clear, we will not hesitate to take further steps if Russia continues to escalate,” Biden added.

The US Treasury has issued a general license authorizing the “termination” of transactions with Nord Stream 2 AG through March 2.

The sanctions did not affect Gerhard Schroeder, a former German chancellor and close friend of Russian President Vladimir Putin, who has chaired Nord Stream’s shareholder committee since 2005.

Nord Stream 2 AG is a Swiss registered company and its parent company is the Russian state-owned gas giant Gazprom. Gazprom owns the entire pipeline but has paid half of the costs, the rest being shared by the Austrian Shell OMV (OMVV.VI)French Inge and German Uniper (UN01.DE) and Wintershall DEA [RIC:RIC:WINT.UL].

(Reporting by Jeff Mason, Kanishka Singh and Daphne Psalidakis); Editing by Doina Chiako, Chizuo Nomiyama, and Howard Guller

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