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US imposes sanctions against Nord Stream 2 pipelayer Fortuna: Pompeo

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US imposes sanctions against Nord Stream 2 pipelayer Fortuna: Pompeo

Highlights

Sanctions implemented against Russia's KVT-RUS

Fortuna still holding off German port of Rostock

Had been pegged to lay in Danish waters from Jan 15

London — The US has imposed sanctions against Russia-based KVT-RUS -- owner of the pipelaying vessel Fortuna -- because of its role in the construction of the Nord Stream 2 gas pipeline, US Secretary of State Mike Pompeo said Jan. 19.

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The Fortuna laid a small 2.6 km stretch of the 55 Bcm/year link in German waters in mid-December -- the first work on laying the pipeline since December 2019 -- and is due to lay some of the remaining 150 km of the pipeline in Danish waters.

Work in Danish waters was scheduled to take place from Jan. 15 but, according to S&P Global Platts trade flow software cFlow, the Fortuna is not yet at the site of the unfinished pipeline and remains off the German port of Rostock.

"Today, the US is imposing sanctions on the Russia-based entity KVT-RUS and identifying the vessel Fortuna as blocked property," Pompeo said in a statement.

Pompeo said KVT-RUS was being sanctioned under the Countering America's Adversaries Through Sanctions Act (CAATSA).

KVT-RUS is reported to have become the owner of the Fortuna in December last year.

A little over 150 km of Nord Stream 2 remains to be laid in Danish and German waters, but the threat of US sanctions against companies involved in laying the pipeline has led to long delays in its completion.

It remains unclear whether the Nord Stream 2 development company will continue with its plans to use the Fortuna to lay the pipeline in Danish waters.

A Nord Stream 2 spokesman said the company was "aware" of the latest US sanctions actions against companies working on the project and was evaluating the details of the sanctions listing.

"We do not comment on potential impacts of these actions," the spokesman said.

It remains unclear whether the Nord Stream 2 development company would continue with its plans to use the Fortuna to lay the pipeline in Danish waters.

The spokesman added that Nord Stream 2 and the companies supporting the project "remain committed to its completion and believe its commissioning is in the interest of Europe's energy security, European consumers, and EU economic competitiveness."

KVT-RUS could not be reached for immediate comment Jan. 19.

FURTHER ACTIONS

Under CAATSA, entities can be sanctioned for selling, leasing, or providing to Russia goods, services, technology, information, or support for the construction of Russian energy export pipelines.

"The US will consider further actions in the near term, under CAATSA, and the Protecting European Energy Security Act (PEESA), as amended," Pompeo said.

The amended PEESA allows for entities to be targeted with sanctions if they offer additional services to Nord Stream 2, such as insurance or certification.

The US has been a vocal critic of Nord Stream 2, saying it gives Russia too much influence over European energy supply.

"Nord Stream 2, if completed, would give Russia the means to completely bypass Ukraine, depriving Ukraine of vital revenues and opening it up to further Russian aggressive actions," Pompeo said.

It would also provide Moscow with the means "to use natural resources as a tool of political pressure and malign influence against western Europe," he said.

"Today's announcement demonstrates that the US is not afraid to hold accountable those who continue to aid and abet this tool of Russian coercion. The United States will continue to work with our friends and allies to ensure Europe has a reliable, diversified energy supply network that does not undermine collective security."

Without Nord Stream 2, Russia's Gazprom will have to rely on the transit of gas via Ukraine in much larger volumes than it intended when it signed a five-year deal at the end of 2019.

The European Commission and a number of EU member states have slammed the US for threatening unilateral sanctions against Nord Stream 2.