Nord Stream 2 and European Energy Security
PRESS STATEMENT
ANTONY J. BLINKEN, SECRETARY OF STATE
MAY 19, 2021
Today, the Department of State submitted a report to Congress pursuant to the Protecting Europe’s Energy Security Act (PEESA), as amended, listing four vessels, five entities, and one individual involved in construction of the Nord Stream 2 pipeline, including Nord Stream 2 AG and the company’s CEO Matthias Warnig. Persons identified in the report are subject to sanctions pursuant to PEESA unless waived. As a result of such sanctions on the entities listed in the PEESA report, the four vessels listed in the report and nine additional vessels owned or controlled by the Federal State Budgetary Institution Marine Rescue Service that are involved in the Nord Stream 2 pipeline’s construction, will also be subject to sanctions.
Furthermore, I have determined that it is in the national interest of the United States to waive the application of sanctions on Nord Stream 2 AG, its CEO Matthias Warnig, and Nord Stream 2 AG’s corporate officers.
Treasury’s Office of Foreign Assets Control (OFAC) also anticipates issuing guidance allowing for the continuation of various transactions and activities involving the Marine Rescue Service that are unrelated to Nord Stream 2 construction – including on a range of search and rescue, environmental, and other missions.
Today’s actions demonstrate the Administration’s commitment to energy security in Europe, consistent with the President’s pledge to rebuild relationships with our allies and partners in Europe. We will continue to oppose the completion of this project, which would weaken European energy security and that of Ukraine and Eastern flank NATO and EU countries. Our opposition to the Nord Stream 2 pipeline is unwavering. Though we may not always agree, our alliances remain strong, and our position is in line with our commitment to strengthen our Transatlantic relationships as a matter of national security.
1) On 5-21-21, OFAC announced the designations, pursuant to PEESA, of four entities and thirteen vessels. Three of the entities and eleven related vessels were added to OFAC's “Non-SDN Menu-Based Sanctions List,” while one entity and two related vessels were placed on the SDN list. The reason for the listing difference is that the one entity placed on the SDN list, LLC Koksokhimtrans, was already designated as an SDN pursuant to EO 13685 (Crimea-related).
Notably, all of the entities actually sanctioned on 5-21-21 were Russian. In the Report to Congress made pursuant to PEESA that set out the persons determined to have engaged in sanctionable conduct, the State Department clarified that the Swiss consortium set up to own and operate the pipeline, its German CEO and two corporate officers were granted sanctions waivers pursuant to Section 7503(f) of PEESA. The waiver was reportedly granted at the behest of the German Government [1].
Given that PEESA (and the related EO) is a Russia-focused sanctions authority, one could argue that there is (as of 8/23/2021) yet to be a PEESA-related designation that qualifies as a genuine "secondary sanctions" enforcement action (i.e. the sanctioning of a person in connection with an international trade transaction, where the person sanctioned is not of the target country). For the criteria we normally use to determine what designation notices to include in the Research System, see Introductory Note Common to all Derivative Designation Notices Included in the Research System.
[1] See https://www.reuters.com/business/energy/us-waive-sanctions-firm-ceo-behind-russias-nord-stream-2-pipeline-source-2021-05-19/
2) See waiver at Report to Congress on Provision of Pipe-Laying Vessels and Activities for Certain Russian Energy Export Pipelines (PEESA).
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* 2-24-2022 Note on dealings with the company that owns Nord Stream 2: "Nord Stream 2 AG is a project company established for planning, construction and subsequent operation of the Nord Stream 2 Pipeline. The company is based in Zug, Switzerland and owned by Gazprom international projects LLC, a PJSC Gazprom subsidiary." (https://www.nord-stream2.com/company/shareholder-and-financial-investors). Investors include large, non-sanctioned non-U.S. persons Royal Dutch Shell plc (Dutch) and Uniper SE (German). While Nord Stream 2 AG was subject to a determination that its activities were “sanctionable” under PEESA, the actual imposition of sanctions was waived, so the entity itself was, as of 2-22-2022, not blocked. On 2-23-2022, however, Nord Stream 2 AG was blocked pursuant to EO 14039. See Secondary Sanctions Enforcement Announcement - Sanctioning NS2AG, Matthias Warnig, and NS2AG’s Corporate Officers (State Dep't); Statement by President Biden on Nord Stream 2 (Feb. 23, 2022).