Russian Gas Pipeline to Europe Faces Delay Due to U.S. Sanctions

By Georgi Kantchev

Russian President Vladimir Putin said Saturday a major Russian gas pipeline to Europe would be delayed due to U.S. sanctions on the project, a slight setback to a German-Russian venture that has emerged as a major flashpoint in both countries' relations with Washington.

The $10.5 billion Nord Stream 2 pipeline will double the capacity of gas Germany imports from Russia -- a project the U.S. fears will further deepen Europe's high reliance on Russian natural gas -- offer Moscow political leverage over Berlin and boost revenue for Russian companies.

The pipeline will run parallel to the existing Nord Stream pipeline, which already supplies a large amount of Russian gas to Germany.

Last month, the Trump administration imposed sanctions targeting all businesses and individuals participating in the project's construction. Soon afterward, Swiss-based contractor Allseas Group suspended laying pipes.

Gazprom, Russia's state-controlled energy company, initially targeted the pipeline for completion by the end of 2019. More recently, Russian officials have said that it would be ready by this summer.

On Saturday, flanked by German Chancellor Angela Merkel, who was visiting Moscow, Mr. Putin said he hopes the project would be finished by the end of the year or the first quarter of 2021.

"We will, of course, be able to finish it on our own, without enlisting our foreign partners," Mr. Putin said. "At issue is the time frame. No doubt, the completion will be pushed back by several months."

Ms. Merkel expressed support for the project and spoke against the U.S. sanctions.

"This project has been legitimized through the new European legislation. We must see it through," Ms. Merkel said Saturday. "We believe that extraterritorial sanctions are the wrong way, and therefore we will continue to support this project, as we did in the past."

Germany has argued that it needs the Russian gas supplied through Nord Stream 2 to reach its goal of phasing out the use of coal by 2038.

Ms. Merkel also believes the additional Russian gas will improve Europe's energy security and has said the Continent already receives large amounts of Russian gas via pipelines in Ukraine.

Berlin also expects Nord Stream 2 to boost trade relations with Moscow and help turn Germany into a hub for gas shipments in Europe.

Russian officials have accused the U.S. of seeking to force Europe to turn away from Russian gas and instead buy more expensive American liquefied natural gas.

Write to Georgi Kantchev at georgi.kantchev@wsj.com

(END) Dow Jones Newswires

January 11, 2020 16:53 ET (21:53 GMT)

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