[Premium] EU Raises Alarm Over US Sanctions Impact

The European Commission (EC) has expressed concern about how draft US sanctions against Russia might "impact on EU energy independence."

At their weekly top-level meeting, July 26, the 28 commissioners discussed the state of play of the US draft Bill on Russia sanctions (Countering Russian Influence in Europe and Eurasia Act 2017), following presentations by EC chief Jean-Claude Juncker and one of its vice-presidents Jyrki Katainen.

In a statement, the commission said the bill – as endorsed July 25 by the US House of Representatives – demonstrates that a number of these concerns are being taken into account but "nevertheless foresees the imposition of sanctions on any company – including European – which contributes to the development, maintenance, modernisation or repair of energy export pipelines by the Russian federation."

The EC said July 26 that could, depending on its implementation, affect infrastructure transporting gas to Europe. This could include the maintenance and upgrading of pipelines in Russia that feed the Ukraine gas transit system, it said, and could impact on projects crucial to the EU's diversification objectives such as the Baltic LNG project, for which Shell and project leader Gazprom said last month they plan to form a joint venture.

Its statement did not cite the Gazprom-led Nord Stream 2 (NS2) and TurkStream pipe projects, planned to be completed by 2019, for which European contractors have already been engaged and in some cases are already working. However both projects are susceptible to impact from the draft bill. Germany has been vocal in cautioning the US that it opposes any move against NS2, or its five western financing backers, two of which are German.

Allseas, based in Switzerland but mainly active in the Netherlands, will undertake offshore pipelay work for both NS2 lines in 2018 and 2019. In April this year, it was also awarded the contract for TurkStream's offshore pipelay in the Black Sea, now in progress.

While EC commissioners stressed the "importance of the sanctions regime against Russia" in place since 2014 and its strict implementation, they insisted that "new sanctions should always be co-ordinated between allies."

"The US Bill could have unintended unilateral effects that impact the EU's energy security interests. This is why the EC concluded today that if our concerns are not taken into account sufficiently, we stand ready to act appropriately within a matter of days. 'America First' cannot mean that Europe's interests come last," said Juncker, adding that the EU is raising its concerns "via all diplomatic channels with the US and its counterparts."

The EC said it will continue to closely monitor the ongoing legislative process in the US and the subsequent implementation of the Bill and would "act swiftly if and when needed."

Mark Smedley