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U.S threaten Mukran Port with sanctions over Russian pipeline

Three United States Senators have threatened sanctions action against to Fährhafen Sassnitz GmbH, which operates Mukran Port, regarding the Nord Stream 2 pipeline project, a 1,225km (760-mile) subsea pipeline between Germany and Russia.

The Nord Stream 2 project is being led by Nord Stream AG, whose majority shareholder is the Russian state company Gazprom. It would see the installation of a further two gas lines to pump more gas to Europe via the Baltic Sea. Nord Stream 2 got the go ahead in 2015, with a financing signed between Gazprom, Royal Dutch Shell, E.ON, OMV, and Engie.
Construction permits for German waters were issued in 2018 and construction has since commenced. Completion is expected by the end of the year or Q1 2021 at the latest. Combined with, Nord Stream 1, the project could see the import of 10 billion m3 of gas from Russia every year.

U.S. Sens. Ted Cruz (R-Texas), member of the Senate Foreign Relations Committee, Tom Cotton (R-Ark.), and Ron Johnson (R-Wis.) sent a letter to Fährhafen Sassnitz GmbH earlier this month warning of sanctions from the U.S under the Protecting Europe’s Energy Security Act should any pipe-laying activity for the project continue. The Senators claim that Nord Stream 2 is grave threat to European energy security and American national security.

In the letter, the Senators wrote: “This letter serves as formal legal notice that these goods, services, support, and provisioning risk exposing Fährhafen Sassnitz GmbH and Mukran Port, as well as your board members, corporate officers, shareholders, and employees, to crushing legal and economic sanctions, which our government will be mandated to impose. These sanctions include potentially fatal measures that will cut off Fährhafen Sassnitz GmbH from the United States commercially and financially. The only responsible course of action is for Fährhafen Sassnitz GmbH to exercise contractual options that it has available to cease these activities.”

They added: “Your provisioning of the Fortuna or Akademik Cherskiy will certainly have become sanctionable the instant that either vessel dips a pipe into the water to construct the Nord Stream 2 pipeline, or engages in any pipe-laying activity relevant to the project, but your exposure extends to any activities related to goods, services, or support of the pipeline. The law requires that ‘the President shall’ issue the designations.”

"If you continue providing goods, services, and support for the Nord Stream 2 project, including by provisioning the Fortuna and Akademik Cherskiy, you would destroy the future financial viability of your company. In the meantime, you would devastate your shareholders value and surely face billions of dollars in shareholder derivative suits for your breach of fiduciary duty."

Steeped in controversy, Nord Stream 2 has also come under fire from Polish officials. Earlier this month, Poland fined Gazprom €50 million claiming that it failed to cooperate with an investigation by UOKiK, the Polish Office of Competition and Consumer Protection.

Back in 2018, UOKiK launched and investigation against Nord Stream 2s financiers, Gazprom, Engie Energy, Uniper, OMV, Shell and Wintershall, citing that works commenced without permission from the government of Poland. In the course of the proceedings, the Authority requested documents that are of significance to the case from Gazprom. However, it claims the company refused to provide information that is important to the pending proceedings.

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