(Bloomberg) -- The U.S. is moving toward sanctions against energy companies involved in Russian pipelines to Europe and Turkey, escalating a threat to punish allies for pursuing projects that the U.S. argues will only benefit Russia.
As Europe's domestic gas supplies decline, the region is becoming more dependent on imported fuel. The almost 10 billion-euro ($11 billion) Nord Stream 2 project from Russia to Germany is being financed by companies including Royal Dutch Shell Plc, Germany's Uniper SE and Wintershall AG and France's Engie SA. Allseas Group SA is helping to expand the Turk Stream link.
“Get out now or risk the consequences,” Secretary of State Michael Pompeo said at the State Department on Wednesday.
Under Wednesday's move, the administration updated its guidance for companies seeking to abide by the Countering America's Adversaries Through Sanctions Act, or Caatsa, which is aimed at limiting business with Russia. The new guidance broadens the scope of the sanctions by making clear that more companies than previously thought could face sanctions for their work on the pipelines.
Russian President Vladimir Putin's spokesman, Dmitry Peskov, called the U.S. plans a crude attempt to put pressure on European business. “It's an attempt to force Europeans to buy more expensive gas under less attractive conditions,” Peskov told reporters Thursday, adding that the Kremlin viewed it as an example of unfair competition.
The U.S. contends the 1,200-kilometer (745-mile) pipeline owned by Moscow-based Gazprom PJSC will give Russia undue control over energy supplies to Europe, but allies including Germany say the pipeline will provide needed resources. TurkStream is set to carry Russian gas under the Black Sea to Turkey and supply several countries in southeastern Europe.
Wednesday's move will add to friction between the U.S. and European nations including Germany, which argue that the threat of sanctions against its companies amounts to interference in its domestic affairs.
Turkstream started taking gas from Russia to Turkey in January. The first string of the pipeline is intended for Turkish consumers, while the second string will deliver gas to southern and southeastern Europe. it's being built by South Stream Transport BV and Allseas Group. Gazprom and Turkey's Botas Petroleum Pipeline Corp. are the owners.
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