US Warns Russia It May Sanction New Gas Pipeline to Germany

(Bloomberg) -- The U.S. warned Russia that it may follow through on sanction threats over the construction of a major natural gas pipeline to Germany.

Asked if the U.S. might impose punitive measures against Nord Stream 2 and other projects, Energy Secretary Rick Perry answered “yes,” during a joint news conference with his Russian counterpart Alexander Novak on Thursday in Moscow. “Minister Novak and I both agree that getting to that point of sanctions is not where we want to go,” he said.

Perry urged Russia to be a “responsible supplier” and to stop using its resources for “influence and disruption,” adding that the U.S. opposes the gas link because it would concentrate two-thirds of Russian exports of the fuel to the European Union in a single choke point. Novak said that Russia was concerned if the U.S. sanctions a “competitive” gas pipeline.

Nord Stream 2 would double Russia’s current capacity to deliver natural gas directly to Germany under the Baltic Sea and circumvent Ukraine. The project would be a major supply route to the EU and has been a sore point between the U.S. and its allies.

In July, U.S. President Donald Trump slammed what he called German dependence on Russian energy, saying it made the nation “captive” to Moscow. The Kremlin said Trump’s attacks were economically motivated and an attempt to promote U.S. liquefied natural gas in Europe.

Later that month, Trump eased his tone after a summit with President Vladimir Putin, saying the U.S. could compete successfully with the Russian gas pipeline even if the project wasn’t in Germany’s best interests.

Trump last year signed a law giving him the right to sanction companies involved in Nord Stream 2. Royal Dutch Shell Plc, BASF SE’s Wintershall unit, Uniper SE, OMV AG and Engie SA have agreed to provide Russia’s Gazprom PJSC with financing for the 9.5 billion-euro ($11 billion) pipeline and could be at risk of penalties.

To contact the reporters on this story: Andrey Biryukov in Moscow at abiryukov5@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net. To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net Richard Bravo, Paul Abelsky.