December 18, 2019 / 3:24 PM / 2 months ago

UPDATE 1-Merkel rules out retaliation after U.S. sanctions Russian gas pipeline

(Adds Merkel quote, Uniper CEO)

BERLIN/FRANKFURT, Dec 18 (Reuters) - Chancellor Angela Merkel said on Wednesday Germany would not retaliate against a decision by the United States to impose sanctions on companies building the Nord Stream 2 gas pipeline.

The U.S. Senate on Tuesday passed legislation to impose sanctions on firms constructing the underwater pipeline to bring Russian natural gas to Germany. It was uncertain whether the measures would slow completion of the project.

"I see no other way than to hold talks to make clear that we don't approve of it," Merkel said, condemning the extraterritorial nature of the sanctions.

The Nord Stream 2 pipeline, which is backed by Russia's Gazprom, would allow Russia to bypass Poland and Ukraine to deliver gas under the Baltic Sea to Germany.

The U.S. government fears the project will increase European dependence on Russian energy.

Gazprom is funding half of the 9.5 billion euros ($10.5 billion) pipeline costs, while the rest is borne by Wintershall Dea, OMV, Engie, Shell and German utility Uniper.

Even though the financiers have so far not been the target of sanctions, Uniper CEO Andreas Schierenbeck said he was taking the issue very seriously.

"If sanctions should affect us – which is currently not the case and we do not have any indication for such – we'll have to look at the potential business impact," he told Reuters.

"I don't know how far sanctions can cripple the project." ($1 = 0.9073 euros) (Reporting by Michelle Martin and Christoph Steitz Editing by Joseph Nasr and Mark Heinrich)

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