US slaps sanctions on company building Russia's Nord Stream 2 pipeline

The United States on Wednesday imposed sanctions on the company in charge of building Russia`s Nord Stream 2 gas pipeline, expanding penalties on Moscow after it recognized two breakaway regions in eastern Ukraine.

The sanctions, which target the Nord Stream 2 AG company and its CEO, Matthias Warnig, add to pressure on the Baltic Sea project that was designed to double the gas flow capacity from Russia to Germany.

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Europe`s most divisive energy project, Nord Stream 2 has not begun operations pending certification by Germany and the European Union.

Germany on Tuesday halted the pipeline, worth $11 billion, citing Russia`s actions toward Ukraine. The United States and the EU worry the pipeline will increase Europe`s dependence on Russian energy supplies and deny transit fees to Ukraine, host to another Russian gas pipeline.

In a statement on Wednesday, U.S. President Joe Biden said his administration had been closely coordinating Nord Stream 2 action with Germany, adding: "Today, I have directed my administration to impose sanctions on Nord Stream 2 AG and its corporate officers."

Biden added: "These steps are another piece of our initial tranche of sanctions in response to Russia`s actions in Ukraine. As I have made clear, we will not hesitate to take further steps if Russia continues to escalate."

The U.S. Treasury Department issued a general license authorizing the "wind down" of transactions with Nord Stream 2 AG until March 2.

The sanctions did not affect Gerhard Schroeder, a former German chancellor and a close friend of Russian President Vladimir Putin`s who has headed the shareholders committee of Nord Stream since 2005.

Nord Stream 2 AG is a registered Swiss firm whose parent company is the Russian state-owned gas giant Gazprom. Gazprom owns the entire pipeline but paid half the costs, with the rest shared by Shell, Austria`s OMV, France`s Engie and Germany`s Uniper and Wintershall DEA.