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WASHINGTON—The State Department broadened the scope of sanctions targeting an unfinished Russian-backed natural-gas pipeline that has been a source of tension between Germany, Russia and the U.S.
Sanctions enacted late last year focused on pipe-laying vessels for Nord Stream 2 and halted the $10.5 billion pipeline, which is designed to transmit Russian gas to Germany, 100 miles short of completion beneath the Baltic Sea.
Guidance the State Department published on its website Tuesday expands upon last year’s measure, saying sanctions would apply to companies providing services, facilities or funding for “upgrades or installation of equipment” for vessels that would work on Nord Stream 2.
U.S. officials are concerned that the pipeline will increase Russia’s leverage in Europe and allow it to bypass a pipeline network that runs through Ukraine, a U.S. partner. Moscow and the Swiss-registered, Russian-owned company building the pipeline, Nord Stream 2 AG, have looked for ways to complete the project.
Tuesday’s guidance “is an appropriate response especially considering there’s more work to do,” said Francis Fannon, assistant secretary of state for energy resources. “We want to make sure that all parties have clarity that they could fall under our sanctions.”
Last year’s sanctions against companies providing deep-sea pipe-laying vessels caused the project’s key ship to bow out. The new guidance takes aim at the ship that some U.S. officials tracking the project believe Nord Stream 2 AG has selected as a replacement vessel.
This Russian ship, the Akademik Cherskiy, doesn’t possess equipment and specifications adequate to lay the remainder of Nord Stream 2, so it would need to be refitted. Earlier this month, the vessel sailed across the Baltic from Germany where it had been docked to the Russian enclave of Kaliningrad.
The pipeline has encountered other recent obstacles before the latest U.S. action. The poisoning of Russian opposition political figure Alexei Navalny in August raised calls within Germany, a steadfast supporter of the pipeline, to distance itself from it.
The Russian lessee of a specialized barge that was mentioned as a possible participant in completing the project stated its refusal to work on Nord Stream 2.
Last month, the International Group of Protection and Indemnity Clubs, a leading maritime insurance and indemnity group, announced that due to the U.S. sanctions threat, “there will be no club cover for any activity involving or related to” Nord Stream 2.
Tuesday’s guidance said that the departments of State and Treasury are prepared to “use the full range of sanctions authorities to halt construction.” More sanctions are expected to be included in the defense spending authorization bill later this year.
Write to Brett Forrest at brett.forrest@wsj.com
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