US warns of sanctions risk to Germany-Russia gas pipeline

A pipeline project between Russia and Germany risks triggering U.S. sanctions because of security concerns, a senior American diplomat said yesterday.

U.S. Deputy Assistant Secretary Sandra Oudkirk, an energy policy expert in the State Department, said the United States opposes the Nord Stream 2 gas pipeline because it could increase Russia's "malign influence" in Europe.

"We would be delighted if the project did not take place," she told reporters in Berlin. Her comments came a day before German Chancellor Angela Merkel is due to fly to the Russian resort of Sochi for a meeting with Russia's President Vladimir Putin, at which the pipeline issue is expected to be a key topic of discussion.

Oudkirk said the new pipeline would divert gas flows away from Ukraine, which depends heavily on transit fees, and could become a pathway for Russia to install surveillance equipment in the Baltic Sea, a sensitive military region.

"We are exerting as much persuasive power as we possibly can" to stop the project, she said, but noted that Congress has given the U.S. administration explicit authority to impose sanctions in connection with Russian pipeline projects if necessary. "Any pipeline project — and there are many multiple pipeline projects in the world that are potentially covered by this sanctions authority — is in an elevated position of sanctions risk," she said.

The $11 billion Nord Stream 2 project would double the amount of natural gas Russia can funnel to the heart of Europe from newly tapped reserves in Siberia.

While Merkel has taken a hard line on what it considers hostile Russian actions in recent years — from the conflicts in Ukraine and Syria to the chemical attack on a former Russian spy in Britain — Germany badly needs to secure its gas supply and Berlin has calculated that Nord Stream 2 offers the best deal.

Jens Mueller, a spokesman for Nord Stream 2, dismissed concerns from the U.S. and several European countries, saying the new pipeline would merely be one of many sources of natural gas for Europe.

"This pipeline can't be used to blackmail or negatively affect any country," he said.

Merkel sent her economy minister, Peter Altmaier, on a frantic diplomatic trip to Moscow and Kiev this week in an effort to secure a deal that would keep some gas flowing through Ukraine, which currently earns up to 2 billion euros a year from transit fees.

Altmaier has said he is optimistic that a "substantial" amount of gas will flow through Ukraine in the future.