Senate panel advances U.S. sanctions against Allseas, Saipem on Nord Stream 2 pipeline

7/31/2019

WASHINGTON (Bloomberg) - The Senate Foreign Relations Committee advanced legislation Wednesday that would impose sanctions on undersea construction of the Nord Stream 2 pipeline for shipping gas from Russia to Germany.

The bill, introduced by Texas Republican Ted Cruz and New Hampshire Democrat Jeanne Shaheen, was approved by the committee 20-2 with bipartisan support. It will be up to Senate Majority Leader Mitch McConnell to schedule a vote in the full Senate.

Shaheen said Wednesday that the only companies that would be affected are Allseas Group SA of Switzerland and Saipem SpAof Italy.

“Russia has a bad history of using energy as a weapon,” said Cruz shortly before the vote. He said Russian President Vladimir Putin “gets his revenue for military adventurism and hostility” from oil and gas.

The Nord Stream 2 project has divided the European Union, with nations led by Poland concerned about Russia’s Gazprom PJSC tightening its grip on the region if the new pipeline comes online. President Donald Trump has also criticized the project, calling for the bloc to diversify its energy supply sources and buy liquefied natural gas from North America.

Trump in June said that Germany was making a “tremendous mistake” by relying on the pipeline to supply its gas.

“We’re protecting Germany from Russia, and Russia is getting billions and billions of dollars in money from Germany,“ Trump told reporters at the White House during a meeting with Polish President Andrzej Duda. At the same meeting, Trump said he’s considering using U.S. sanctions to stop construction of the pipeline.

The legislation sponsored by Cruz and Shaheen would target vessels that lay the pipeline and sanction executives from companies linked to those vessels. It would deny visas to those individuals and block transactions related to their U.S.-based property or interests. The bill would also penalize entities that provide insurance to the project.

GOP Senator Rand Paul of Kentucky argued against the measure, saying, “There’s a great deal of consternation over this proposal among our European allies.”

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