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GAS LNG Nord Stream 2 25 July, 2018 10:00 am   
Editorial staff

Sakmar: New US sanctions law on Nord Stream 2 is unlikely to happen

Last week, Republican Senators John Barrasso, Cory Gardner and Steve Daines proposed a bill that would introduce US sanctions against the Nord Stream 2 project. The ESCAPE Act would also support NATO allies who are exposed to Russia’s domination of energy. – The possibility that this bill will be accepted by the Congress, however, is very low – says Susan Sakmar, Professor at the University of Houston, a lawyer and author of a book about the LNG market “Energy for the 21st Century: Opportunities and Challenges for LNG”.

The bill presented by the Congress concerns several elements. – At the outset, the bill sets out US policy which seeks to “reduce the dependency of allies and partners of the United States on Russian energy resources, especially natural gas, in order for those countries to achieve lasting and dependable energy security.” To achieve this goal, the Bill proposes to expand the expedited process for US LNG exports from FTA countries to also include NATO member countries. – explains Susan Sakmar.

The expert adds that the bill also includes Japan, which does not have an FTA with the US, and could include other countries if the Secretary of State, in consultation with the Secretary of Defense, determine that exportation of natural gas to that foreign country would promote the national security interests of the US.

Asked whether the proposal of a new legal act could block the construction of the Nord Stream 2 project, BiznesAlert.pl interviewee assesses that The Bill also proposes sanctions with respect to the development of pipelines in Russia and targets persons or entities that invest in Russian pipelines so this could impact Nord Stream 2, even though the Bill doesn’t specifically mention Nord Stream 2.

In her opinion, however, the likehood that this bill will pass through the Congress is very low. – In the US, a Bill must pass both houses of Congress (the Senate and House of Representative) before it can be sent to the the President to sign in to law or veto. A very low percentage – about only 4% – of proposed bills actually survive the legislative process and make it in to law. The Escape Act seems to be more of a ceremonial bill to push back on Russia and also deter NATO countries from participating in Nord Stream 2 – Susan Sakmar believes.

However, if the Bill does advance and become law, it would expedite the export approval process at the Department of Energy. The DOE would be able to expeditiously approve an LNG export application for countries that not only have an FTA with the US (this is the current law) but also for NATO countries and Japan. This doesn’t change the market dynamics of US LNG to Europe – it just would make the export approval process a bit quicker for some countries – emphasizes Sakmar in an interview with BiznesAlert.pl