U.S.,RUSSIA SANCTIONS ANEW

PLATTS - US Energy Secretary Dan Brouillette took aim at Russia on Thursday, claiming it has "weaponized" its oil and natural gas supply while portraying an increase in US LNG exports as a liberator of European energy markets.

"This monumental rise [in US LNG exports] is putting EU countries on a path to liberation from Russia, which has long wielded its energy supply as an instrument of coercion and subjugation," Brouillette said in a speech before the National Petroleum Council.

The 764-mile Nord Stream 2 will deliver Russian gas to Germany under the Baltic Sea and is expected to double the capacity of the gas corridor to 110 Bcm/year.

In remarks to reporters after the speech, Brouillette declined to fully support Nord Stream 2 gas pipeline sanctions passed by the US House of Representatives Wednesday, saying he was still reviewing the legislative language. Brouillette was formally sworn into office Wednesday, replacing Rick Perry as energy secretary.

"We've long supported a lesser dependence of Europe on Russian gas, Gazprom in particular," Brouillette said. "As we have said in the past, we understand that Congress has the same concerns that we have. We understand Congress' concerns quite clearly."

The Nord Stream 2 sanctions language was included in a defense spending bill, the National Defense Authorization Act, which the House passed by a 377-48 vote Wednesday night. The Senate is expected to approve the bill this week.

The sanctions language is modeled after the Protecting Europe's Energy Security Act, or S. 1441, which was introduced by Texas Senator Ted Cruz in May. It calls for the State and Treasury departments to submit a report within 60 days that identifies "vessels that engaged in pipe-laying at depths of 100 feet or more below sea level for the construction of the Nord Stream 2 pipeline project, the TurkStream pipeline project or any project that is a successor to either such project." Those vessels and identified executives involved with those vessels could then be sanctioned.

Brouillette said that State and Treasury departments "will follow the law" if President Donald Trump signs the bill.

German foreign minister Heiko Maas slammed the move by the US to introduce sanctions against the pipeline.

"European energy policy is decided in Europe, not the US," Maas said Thursday.

"We fundamentally reject external interference and sanctions with extraterritorial effect."

Last week, Switzerland-based Allseas confirmed it has started laying the Danish section of the pipeline using its Pioneering Spirit vessel.

The timeline for work to lay the section of pipeline in Danish waters will be key to when Nord Stream 2 is able to begin flowing gas, with wider implications for the European gas market -- including whether Russia's Gazprom agrees a new transit deal with Ukraine's Naftogaz post-2019.

The Nord Stream provisions in the NDAA could be the first of more Russia sanctions legislation to be passed by Congress in the near term, according to analysts with ClearView Energy Partners.

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