Senators Prod Biden Admin on Nord Stream 2 Pipeline Sanctions

WASHINGTON (Reuters) — Two U.S. senators urged President Joe Biden to ensure the implementation of sanctions passed in January aimed at stopping the Nord Stream 2 Russia-to-Germany gas pipeline project, which a State Department spokesman reiterated on Friday was a "bad deal" for Europe.

Senators Jim Risch, a Republican, and Jeanne Shaheen, a Democrat, urged the State Department not to delay issuing a report to Congress required under sanctions passed in the annual defense policy bill, which they said was due by Feb. 16.

The report will identify companies involved in constructing, insuring and verifying Nord Stream 2. The law requires the sanctions to be imposed on the companies listed.

"We look forward to working with you to bring an end to this dangerous project," the senators said in the letter, according to a copy seen by Reuters.

The letter made reference to "press reports that the German government has put forth an offer that would require the United States to disregard statutorily-mandated sanctions," without giving details. Reuters has not confirmed the reports.

Russian state gas company Gazprom is racing to finish the $11 billion project to bring natural gas to Europe via Germany ahead of the implementation of further U.S. sanctions. The company expects the project to be completed this year.

Work on the project stopped for a year after Washington imposed sanctions in late 2019.

Nord Stream 2 is more than 90% complete but requires additional tricky work in deep waters of the Baltic Sea off Denmark, where unexploded World War Two bombs lie on the seabed.

The United States, which has opposed the project since the days of former President Barack Obama, says the project would increase Russian President Vladimir Putin's economic and political influence over Europe.

The pipeline would avoid Ukraine, Slovakia and other countries, depriving them of lucrative transit fees.

The project has become even more politicized after Kremlin critic Alexei Navalny, who was poisoned in August in Siberia and flown to Germany for treatment, was imprisoned by Russia last week.

The Trump administration pushed U.S. exports of liquefied natural gas, or LNG, as an alternative for Europe to Russian gas. Russia, Germany and Nord Stream 2, a consortium of Gazprom and several Western companies, say the project is purely about commerce.

'DIVIDES EUROPE'

The State Department has not said when it will put out the report.

"It's a bad deal because it divides Europe, it exposes Ukraine and Central Europe to Russian manipulation, it goes against Europe's own stated energy and security goals," Ned Price, the State Department spokesman, told reporters.

But Price said "sanctions are only one" of many tools and that the department will work closely with allies and partners to reinforce European energy security and to safeguard against "predatory behavior".

Asked whether the department intends to meet the Feb. 16 deadline, Price said it is committed to engagement with Congress to ensure lawmakers "have the information they need in as timely a manner as we are able to provide".

Backers of Nord Stream 2 sanctions said Congress would continue pushing the administration on the issue.

Several companies, including Zurich Insurance Group , one of 20 insurers in a consortium backing the pipeline, have already dropped out of the project fearing U.S. sanctions.

"Congress knows who these companies are and will push back if they aren't included" in the report, said Daniel Vajdich, president of Yorktown Solutions, a lobbying group.

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