Expert: US sanctions will not affect gas pipeline construction projects to Europe

7 august 2017

US President Donald Trump signed a law expanding a number of sectoral sanctions against the Russian economy. Among others, new expanded sanctions target the energy sector and specifically the Nord Stream-2 gas pipeline. At the same time the sanctions affect not only Russia but a number of EU countries as well. Possible effects of the new sanctions on relations and business of Russia, Germany, and other countries were discussed by experts at a round table hosted by the IIA Rossiya Segodnya press center.

Irina Pominova, a Deputy Head of the Department for Fuel and Energy Sector of the Analytical Center, talked about the potential threats the new sanctions pose to Russia's energy sector. "We're talking about so-called secondary sanctions. These sanctions do not affect American business but they are targeted at third countries that cooperate with sanctioned countries and that's a key issue here. The US employed this approach against Iran, especially in the early 2010s. Eventually, it was the mass exodus of various western companies from Iran that wreaked havoc in that country's energy sector. The pressure could be felt and it was these secondary sanctions that proved the most effective," the analyst believes.

"As far as specific projects are concerned, there is a lot of talk at the moment about the fate of the Nord Stream-2," Irina Pominova noted. "The version of the law signed by Trump has a proviso that when it comes to our pipelines all decisions must be made in cooperation with their allies. One potential ally here is the EU. This means that the adopted sanctions have loopholes that can allow us to solve certain issues. In other words, there is still some room for negotiations. Moreover, the EU countries may regard this loophole as a key to success on their part," the expert said.

Irina Pominova believes it's still unclear how the law will affect our projects and how the participants in the transactions are going to resolve the situation. "All the agreements have already been reached, all the documents have been signed, everything has been approved, investments have been made. If our partners pull out of the deal now they'll be in breach of contract," the expert warns. Ms. Pominova noted that there are a lot of projects that some US and EU companies participated in. However, the sanctions imposed in 2014 still had a significant impact on these projects. Back then a lot of companies had to pull out of Russian projects. But some projects kept going and companies are looking for ways to find a common ground, the expert noted. "Currently we witness a decline in investments in the oil and gas sector because of the low oil and gas prices. If we torpedo joint projects even more we will essentially undermine our future and investment processes," the analyst is convinced. At the same time, Ms. Pominova doubts if the new US anti-Russian sanctions will be able to affect the plans to build new gas pipelines to Europe.

Video footage of the event is published on the website of the IIA Rossiya Segodnya press center.