The US House of Representatives passed a resolution that calls for stopping the Nord Stream 2 project and supports imposition of sanctions under the CAATSA act. The resolution asks the president to use all means to support European energy security. Although not binding, the resolution adds to sanction risks, in our view. We remind that five EU companies (Germany’s Wintershall and Uniper, Austria’s OMV, Anglo-Dutch Shell and France’s Engie) are involved in financing Nord Stream 2 and a decision to impose on them secondary sanctions will represent a major escalation of US-EU relations. We think this may happen in the context of broader negotiations on trade issues between the US and the EU.
The project was discussed earlier this week during a conversation between Putin and Merkel, but no new statements emerged. Germany views the project as a purely commercial one, but it also insists that it should not halt gas transit through Ukraine. The pipeline will not completely eliminate Russia’s dependence on transit through Ukraine, but it will greatly reduce it, especially if the second leg of TurkStream is also built on time.