Nord Stream 2 and Potential Sanctionable Activity (March 18, 2021 State Dep't Press Statement) (PEESA)

Date issued: Mar. 20 2021

TURBOFAC Commentary (388 words)

Notes:

1) Nord Stream 2 and Potential Sanctionable Activity (March 18, 2021 State Dep't Press Statement) comes on the heels of significant political backlash [1] over the Biden Administration having declined to sanction any non-Russian entities in connection with its February 19, 2021 report to congress pursuant to PEESA Section 7503. As of February 19, 2021, there appeared to have been European entities that clearly met the criteria for full blocking under PEESA, but the administration only designated a single Russian vessel and its owner [2], both of which were already blocked pursuant to the CAATSA at the time they were blocked pursuant to PEESA.

The Press Statement, as rote as it may seem, appears aimed at clarifying that the February 19, 2021 report to congress should not be taken to signal a willingness to ‘look the other way’ on activities that are sanctionable under PEESA. See Protecting Europe’s Energy Security Act (State Dep't FAQs) (May, 2021 PEESA designations).

[1] https://www.foreign.senate.gov/press/ranking/release/ranking-member-risch-statement-on-biden-administrations-nord-stream-2-report

[2] https://web.archive.org/web/20221203061408/https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20210222

2) For comments on PEESA generally, see Sec. 7503 of the NDAA for FY 2020 (PEESA), as amended by Sec. 1242 of the NDAA for FY 2021 (text incorporating amendments).

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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).