January 11, 2019 / 8:54 AM / in 6 months

German business group says U.S. mustn't sanction Europe's use of Russian gas

BERLIN (Reuters) - Any attempts by the United States to stop Europe buying Russian gas via additional sanctions against Moscow would be an attack on the continent’s sovereignty, a German business group said on Friday.

The United States has threatened, but not so far levied, sanctions against European companies participating in the Nord Stream 2 pipeline, which is being built by a consortium led by Russian state gas giant Gazprom (GAZP.MM).

The pipeline, which would carry gas straight to Germany under the Baltic Sea, is driving a wedge between Germany and its allies as it would deprive Ukraine of the lucrative gas transit fees it currently enjoys.

“If the U.S. decided to sanction the use of Russian gas, that would be an attack on German and European sovereignty,” Wolfgang Buechele, chairman of the German Committee on East European Economic Relations, told a new year news conference.

Any move in that direction should draw a sharp response from Berlin, he said.

“I believe the Nord Stream 2 project is in the pure interests of not just Germany but also of Europe,” Buechele said of the pipeline, which would feed into Europe-wide gas transmission networks.

The German Committee on East European Economic Relations is an umbrella group representing German firms doing business in Eastern Europe.

Nord Stream 2 has also divided Germany’s political class. Former German Chancellor Gerhard Schroeder, bound by friendship to Russian President Vladimir Putin, has senior roles in the Nord Stream 2 holding company as well as at state-owned energy firms Gazprom (GAZP.MM) and Rosneft (ROSN.MM).

Others, especially in Chancellor Angela Merkel’s Christian Democrats, are notably cooler on the project, which, though owned by Gazprom, numbers German energy company Uniper (UN01.DE) and BASF-owned (BASFn.DE) oil company Wintershall [WINT.UL] among its financial investors.

Buechele said Europe had no alternative to Russian gas, adding that the liquefied natural gas that Washington has touted as an alternative was both more expensive and more harmful to the environment.

“We need these resources in the long term,” he said.

Germany’s manufacturing sector is heavily reliant on exports to Russia and was hard hit hard by EU and U.S. sanctions levied after Russia invaded and annexed parts of neighboring Ukraine, and again after U.S. sanctions were ratcheted up late last year.

The committee said it expected trade with Russia to stagnate this year - even as trade with neighboring Poland, with less than a third the population, reached a record high of 120 billion euros ($138 billion) last year, twice the volume of Germany’s Russia trade.

Reporting by Andreas Rinke and Thomas Escritt; Editing by Riham Alkousaa and Susan Fenton

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