New US sanctions against Russia in November. They will hit Nord Stream 2

USA is going to introduce new sanctions against Russia. They may limit financing of Russian banks and oil and gas companies, including Nord Stream 2. New limits will be valid from 28th of November. Accurate directives have been published on the American Treasury Department website.

On the 3rd of August, US president Donald Trump signed a bill that enables punishing every company that cooperates with Russians not only in construction, but also in modernizing and financing investments.

This means that European companies that cooperate with Russian partners will be a subject to American sanctions. This concerns the companies that are partners in pipelines’ construction, like Nord Stream 2. Under the sanctions, maximum period of Russian institutions financing has been lowered from 30 to 14 days, and oil and gas companies from 90 to 60 days.

Problem for Nord Stream 2

In the meantime, European companies like Engie, Shell, OMV, Uniper and Wintershall have agreed to cover a half of € 9,5 billion of costs of Nord Stream 2. This amount was initially intended to be covered by Gazprom’s partners in 30 per cent. This money – € 2,9 billion – are already on Nord Stream 2 AG’s account, which is responsible for realization of the project. Remaining 70 per cent was supposed to be obtained thanks to specific purpose loans. Since the sanctions are launched, it will be harder to acquire those funds.

So far, European companies have dedicated € 324 million each for realization of the pipeline. Engie noted, that it may quit the project if Nord Stream 2 becomes a target of sanctions. OMV claims that optional limits inducted by the USA may fully disable external financing of the pipeline.

What is interesting, Russian vice-prime minister Arkady Dvorkovich said that because of new US sanctions, Moscow may changed Nord Stream 2 financing model. However, he noted that economic arguments will outweigh politics.

Piotr Stępiński