Special Report-Insurers in Uncertainty as Fresh U.S. Sanctions on Nord Stream 2 on Horizon

A renewed threat of U.S. sanctions on Nord Stream 2 pipeline forces European insurance companies to make a decision whether to keep their involvement in the $11 billion project. The U.S. stepped up sanctions on companies linked with the project last week, and German energy regulator has paused the certification process requiring the Swiss based Nord Stream 2 AG to open a subsidiary in Germany.

The opponents of the project have been warning that Nord Stream 2 will make Europe too reliant on Russian energy, while proponents say it is vital to secure energy supplies especially at a time when gas prices soar.

The threat of new sanctions has caused European insurers AXA, Zurich and Munich Re to withdraw from the project this year. With no insurance cover, the project will be vulnerable to costs for damage and have difficulty securing loans.

Earlier this year, the U.S. Government decided not to sanction non-U.S. firms for their involvement in the project after Germany assured the Biden Administration that it would take action if Russia weaponizes energy, particularly in its relations with Ukraine.

Nevertheless, after Russian military build up near the Ukrainian border, the chances of sanctions being imposed have heightened.

Kremlin has repeatedly dismissed the possibility of a new attack on Ukraine, but both NATO and the U.S. have warned Russia that there would be serious consequences of a military aggression.

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