Morgan Lewis US and Russia Sanctions Update
Export Pipeline Sanctions (cont'd)
And State Dep't Oct. 2020 guidance on PEESA (prior to Dec. 2020 PEESCA / NDAA 2021
enactment)
Clarifying that knowingly providing vessels for construction of such project "may cover foreign firms or
persons who provide certain services or goods that are necessary or essential to the provision of operation
of a [pipelaying vessel]"
Including "providing services or facilities for upgrades or installation of equipment for those vessels, or
funding for upgrades or installation of equipment for those vessels"
And see
The closely related CAATSA section 232 (slide 52), and
The July 2020 updated / stiffened State Dep't guidance thereon
removed key grandfathering carve-out for pipeline projects (such as NS2) that were underway upon CAATSA's
August 2017 enactment
also removed the carve-out for investments and loan agreements made before August 2017 - thus evidently
exposing anew the participating European energy companies and other "finance partners" to risk of section
232 sanctions
but accompanying State Dep't FAQs somewhat softened this aggressive new stance - by indicating that pre-
July 2020 participation as such would not be targeted (see FAQS 3-5)
the FAQs also stress intended CAATSA 232 application to proposed TurkStream second line (TS2)
All the above taken together (plus direct threat letters by senator Cruz of Dec. 2019 and August 2020)
already had real effects
on NS2 very much so - the undersea pipe-laying for which wasn't quite complete: the contractor Allseas
immediately suspended pipe-laying and then announced that it would not resume work
and another direct threat letter of 5 August 2020 from Senator Cruz and two others to executives of the
German port that has been serving as staging area for completion of NS2 (which triggered considerable
backlash in Germany)
then the further tightening US sanctions (by law and executive guidances) and related threats through 2020
and into early 2021 continued to scare off non-Russian supporting participation (by insurers and then DNV-GL,
the leading Norway-based certification agency) – thus causing further/ongoing delay
Morgan Lewis
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