Foreign firms flee Russia gas project over US sanctions

DNV GL, an international accredited registrar and classification society, has announced it would not be able to provide the required certification for Russia’s almost-complete $11.5 billion controversial gas pipeline to western Europe bypassing Ukraine and other traditional transit states of Eastern Europe.

Norway-based firm said in a statement it suspended its involvement in compliance verification work for fear of breaching the broadened sanctions by the United States.

Under the new directive the US Congress authorized this week after Trump’s initial veto, companies facilitating the construction of the pipeline will have until 31 January to wind down involvement in the pipeline project to avoid the full force of the sanctions.

The US authorities expect almost all of the dozens of small to large foreign contractors to jump the ship during January to avoid being punished by the tough sanctions.

The  $11.5 billion, 1,225-km Nord Stream 2 project is seen by the US as a serious geopolitical risk unnecessarily increasing Europe’s reliance on Russia, sidelining traditional transit states of eastern Europe, and enriching Kremlin-controlled Gazprom, at a time when Moscow stands accused of undermining European security and stability.

On January 1, the Republican-led Senate’s 81-13 vote followed the Democrat-led House’s 322-87 vote on Dec. 28. amid the the tangled politics of the moment to jointly overturn Trump’s veto of the annual the National Defense Authorization Act (NDAA) which has traditionally been regarded as bipartisan must-pass legislation and signed into law by the end of the calendar year in the 59 years running.

The US$740.5 billion defense policy bill, among other important provisions, were internationally watched for its targeting of Russia for its recent malicious cyber activity and controversial gas pipeline to the western Europe.

This week Russia was reported to be stepping up work, after a one-year pause prompted by previous U.S. sanctions, to complete the nearly 90%-done pipeline before the U.S. imposes new sanctions.

Previous year’s NDAA included sanctions against foreign vessels and company executives involved in the project. The measures were later credited for bringing work on the pipeline to a halt. This time, the provisions go further, targeting companies that provide insurance cover, or services for testing, inspection and the certification necessary for completion of the project.

Companies providing services that fall under the new directive’s provisions will have until 31 January to wind down involvement in the pipeline project to avoid the full force of the sanctions.

Implementing the sanctions is likely to straddle the final weeks of President Trump’s term in office, which ends on 20 January, and the incoming administration led by president-elect Joe Biden will likely press for a tougher stance against Russia.

The European Commission also opposes the Nord Stream 2 project but says there are no legal grounds to prevent the private investment from going ahead.

The US also has other sets of sanctions in place for Russian companies and foreign companies involved in Russian energy exploration over Moscow’s illegal annexation of Crimea and direct involvement in violence and destabilizing actions in eastern Ukraine.