EU warns of response 'within days' to US sanctions on Russia that may affect energy firms

European Commission President Jean-Claude Juncker arrives for a meeting of the College of Commissioners at the European Commission in Brussels, on July 26, 2017.
European Commission President Jean-Claude Juncker arrives for a meeting of the College of Commissioners at the European Commission in Brussels, on July 26, 2017.PHOTO: REUTERS

BRUSSELS (AFP, Reuters) - The European Union said on Wednesday (July 26) it would respond "within days" to a vote by the US House of Representatives to impose tough new sanctions on Russia that may affect energy flows to Europe.

"The US Bill could have unintended unilateral effects that impact the EU's energy security interests," European Commission head Jean-Claude Juncker said in a statement following talks by top bloc officials on the matter in Brussels.

"If our concerns are not taken into account sufficiently, we stand ready to act appropriately within a matter of days.'America First' cannot mean that Europe's interests come last," he said, repeating a threat made in May following talks with Mr Trump.

The US sanctions package, which also targets North Korea and Iran, was approved overwhelmingly in the House on Tuesday (July 25) and now heads for expected passage by the Senate.

The legislation is aimed at punishing the Kremlin for allegedly meddling in the 2016 US presidential election, and Russia's annexation of Crimea.

In an apparent concession, the House modified a provision so the Bill only targets pipelines originating in Russia, sparing those that merely pass through, such as the Caspian pipeline that carries oil from Kazakhstan to Europe.

But Brussels is worried that the fresh wave of measures could end up penalising European firms that contribute to the development of Russia's energy sector.

While the Bill "demonstrates that a number of these concerns are being taken into account", it nevertheless foresees "sanctions on any company (including European) which contributes to the development, maintenance, modernisation or repair of energy export pipelines" of Russia, the EU said in a statement.

"Depending on its implementation, this could affect infrastructure transporting energy resources to Europe," including those transiting through Ukraine, it said.

European energy industry sources voiced alarm at the potentially wide-ranging damage of the new US measures.

"This is pretty tough," one industry source told Reuters."We are working with EU officials to see what safeguards can be anticipated to protect our investment and give us certainty."

Among the European firms involved in Nord Stream 2 are German oil and gas group Wintershall, German energy trading firm Uniper, Anglo-Dutch Royal Dutch Shell, Austria's OMV and France's Engie.

But EU officials warn the legislation would also hit plans for the LNG plant on the Gulf of Finland in the Baltic Sea, in which Shell is partnering with Gazprom. The EU document indicated the sanctions might jeapardise Eni's 50 percent stake in the Blue Stream pipeline from Russia to Turkey as well as the CPC pipeline, carrying Kazakh oil to the Black Sea, in which European groups BG Overseas Holdings, Shell and Eni are involved.

Brussels further decried the sanctions Bill as a unilateral action by Washington that disrupted previous close cooperation on measures against Russia.

To date, the sanctions have been coordinated on both sides of the Atlantic to maintain a united front.

The EU and US imposed the sanctions in the wake of Russia's annexation of Crimea in March 2014 as the Ukraine crisis deepened after the ouster of a pro-Moscow government.

In addition to the Crimea measures, the EU imposed damaging economic sanctions against Russia after the shooting down of Malaysia Airlines flight MH17 in eastern Ukraine in July 2014, blamed by the EU on the rebels.

Germany expressed continued concern about the US moves, while saying changes made in the Bill passed by the House of Representatives on Tuesday are steps in the right direction.

Germany is holding to its position that sanctions rules mustn't be used as a tool to influence specific industries, Mr Martin Schaefer, a Foreign Ministry spokesman, said in Berlin on Wednesday.

Still, Germany welcomed the latest legislative proposals calling for US coordination with European Union allies before sanctions are applied, Mr Schaefer said."

We have taken a big step forward, and I believe we have been able to convince our partners in Washington to act together in the government and in the legislature," Mr Schaefer told reporters. "We're happy to cooperate with the Americans, also on sanctions against North Korea, against Russia, if possible even against Iran, but please in agreement and together."