Morgan Lewis US and Russia Sanctions Update
Export Pipeline Sanctions (cont'd)
There was a de-facto wind-down period
for persons having, not later than 30 days after the 20 Dec. 2019 enactment, engaged in good faith efforts
to wind down operations that would otherwise subject the person to the sanctions
see also OFAC FAQ 815 of 20 Dec. 2019 in this regard
could be subject to different interpretations - in any event the main pipelaying contractor Allseas of
Switzerland stopped work immediately following the enactment and never resumed - and more recently
several other int'l cos. have backed out (see slide 7 above)
and consider further implications of Biden Admin. Feb. 2021 update report under PEESCA
Plus typical exception and waiver authorities, including for
repair/maintenance / environmental remediation re pipelines, or safety of vessels and crew
national security and national interest waivers
And a "termination and sunset" provision - which would end the sanctions authority (and any
sanctions already imposed) on the earlier of (i) 5 years from enactment or (ii) the date on which
the President certifies to Congress that appropriate safeguards have been put in place
to minimize Russia's ability to use the pipeline project as a tool of coercion / potential leverage (including by
achieving unbundling of energy production/transmission in Europe), and
to ensure that the project would not result in a >25% decrease in volume of Russian energy exports
transiting through existing pipelines in other countries, particularly Ukraine, relative to the 2018 average
monthly volumes (note that the reported Russia-Ukraine gas transit extension agreement for 2020-2024
might serve to satisfy this requirement – will need analysis over time)
note: these provisions could provide the basis for a US-Germany/EU compromise agreement allowing NS2 to
go forward - if there is the political will on both sides
Morgan Lewis
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