This news updates our previous circular No.20-013 dated 18 September 2020 regarding US sanctions against the construction of the Nord Stream 2 (NS2) and TurkStream (TS2) pipeline projects.

US lawyers Freehill Hogan & Mahar LLP have advised that Protecting Europe’s Energy Security Clarification Act (PEESCA) was newly enacted.

PEESCA now authorizes sanctions against vessels that engage in pipe-laying or “pipe-laying activities” for the construction of NS2 or TS2. Pipe-laying activities are defined as meaning “activities that facilitate pipe-laying, including site preparation, trenching, surveying, placing rocks, backfilling, stringing, bending, welding, coating, and lowering of pipe.”

PEESCA also authorizes sanctions against foreign persons who are determined to have knowingly:

1. sold, leased, or provided, or facilitated selling, leasing, or providing, those vessels for the construction of such a project;
2. facilitated deceptive or structured transactions to provide those vessels for the construction of such a project;
3. provided for those vessels underwriting services or insurance or reinsurance necessary or essential for the completion of such a project;
4. provided services or facilities for technology upgrades or installation of welding equipment for, or retrofitting or tethering of, those vessels if the services or facilities are necessary or essential for the completion of such a project; or
5. provided services for the testing, inspection, or certification necessary or essential for the completion or operation of the Nord Stream 2 pipeline.

Members are reminded that cover may be excluded if vessels are involved in activities that are either unlawful and/or put the Club at risk of breaching sanctions. Members who are contemplating any activity involving or related to the NS2 or TS2 construction projects should therefore be mindful of the risk that cover exclusions will be triggered.

All Members are therefore strongly urged to assess and mitigate the risks of entering into contracts on the Nord Stream 2 or TS2 construction projects and exercise the utmost due diligence to avoid exposure to sanctions or enforcement actions as far as possible.