Sanctions circular: Nordstream 2 & Turkstream 2

This Circular is to raise awareness of an expansion in United States sanctions, targeting the construction of the Nord Stream 2 and Turkstream 2 pipeline projects and those who provide services in connection with either project, including related insurance.

Previous position:

Under the 2019 enactment of Protecting Europe Energy Security Act (PEESA), the US government imposed sanctions against all foreign vessels involved in the construction of the Russian deep-water pipelines, Nord Stream 2 and Turkstream 2. 

Current position under amendments:

The US government have recently enacted the PEESA Clarification Act which expands the activities deemed sanctionable under the act. 

These pipe-laying activities, defined as those ‘that facilitate pipe-laying, including site preparation, trenching, surveying, placing rocks, backfilling, stringing, bending, welding, coating, and lowering of pipe’ are as follows:

• Pipe-laying and related activities, including site preparation, trenching, surveying, placing rocks, backfilling, stringing, bending, welding, coating, or lowering of pipe for either project
• Selling, leasing, or otherwise “providing” pipe-laying vessels, including through deceptive or structured transactions for either project
• Selling, leasing, or otherwise “providing” goods, services, information, technology, or support for either project
• Underwriting, insuring, or reinsuring either project
• Testing, inspection, and certification for the Nord Stream 2 pipeline

Those undertaking any of the above activities in relation to Nord Stream 2 and Turkstream 2 have a 30 day wind-down period, from 1 January 2021.

In addition to the above expansion of sanctions under PEESA (Clarification Act), in July 2020, the US government issued guidance in relation to s.232 of Countering America’s Adversary’s Through Sanctions Act (CAATSA) which committed “to expand the focus of implementation of section 232 to address certain growing threats to U.S. national security and foreign policy interests related to Russian energy export pipelines, particularly with respect to Nord Stream 2 and the second line of TurkStream.”

For further information please refer to your in-house legal advisor or preferred legal practitioner.