Morgan Lewis US and Russia Sanctions Update
What's Newest (cont'd)
Most recent Nord Stream 2 ("NS2") gas export pipeline sanctions developments
OFAC's 19 Jan. 2021 SDN designation of the Fortuna (one of the primary vessels poised to resume
NS2 pipelaying in the Baltic Sea) and its Russian owner co. KVT-Rus - and then their designation
again in late Feb. 2021 (under both PEESA, and CAATSA section 232 - see slides 8, 52, 60-62)
related late Feb. PEESCA-mandated Biden Admin. report to Congress - emphasized / named the several
companies known to have stopped participation the project because of sanctions (including a number of global
insurers)
late Feb. / early March loan funding suspension announcements by two of the five European energy company
participants in NS2 - but with the project co. assuring that there is already full funding to complete the work
some US Senate and House pressure on Biden Administration for further sanctions (including 3 March Senators'
letter to President Biden and 5 March House of Reps. letter to Secretary Blinken naming several primary and
support vessels (mostly Russia-registered) other than Fortuna – including the long-publicized Admiral Cherskiy -
also understood to be involved in the NS2 pipelaying)
continuing spectrum of NS2 views in EU - including some renewed opposition in reaction to the Navalny events,
and also some hardening German gov't support per perceived need for more Russian gas to help wean the
economy from nuclear and coal
Apparent resumption of Russian vessels' pipelaying work as of early 2021 (though not clear how
much now fast can be done)
Recent continuing speculation and reports on German gov't / Biden Admin. possibly willing and
working toward compromise that would allow NS2 to be completed without further sanctions
in return for agreement on reliable mechanism to shut it down in event Russia reduces gas flow through Ukraine
below agreed level in future (and some possible further deal element)
the still-effective termination / sunset provision in the original PEESA/NDAA 2020 would allow for such a deal
(see slide 61)
But most recent (18 March 2021) official stated Biden Admin. anti-NS2 intention, in light of
strong bipartisan congressional pressure etc.
Morgan Lewis
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