OMV chief rejects U.S. sanctions threat on Nord Stream 2 firms: report

[January 15, 2019]   FRANKFURT (Reuters) - Threatening to impose U.S. sanctions on companies involved in the Russian-backed Nord Stream 2 pipeline is unacceptable, the head of Austria's OMV <OMVV.VI>, which has a stake in the project, told Germany's Handelsblatt daily.

The U.S. embassy in Germany said on Sunday that Ambassador Richard Grenell had told German companies involved in the project that they could face sanctions if they continued with the plan that is already far advanced.

"The letter is a totally unacceptable threat to German companies," OMV Chief Executive Rainer Seele, a German national who has run the Austrian firm since 2015, told the business daily.

"Europe must not allow itself to be patronized by the U.S. in matters of energy politics," he said.

A U.S. embassy spokesman has said Washington intended the letter to be a "clear message" rather than a threat.

The $11 billion pipeline project, being implemented by Russia's Gazprom <GAZP.MM> with Western firms including Germany's Uniper <UN01.DE> and Wintershall [WINT.UL], aims to bring more Russian gas directly to Germany under the Baltic Sea.

President Donald Trump, who wants to export more shipments of U.S. liquefied natural gas (LNG) to Europe, has said Germany is "captive" to Moscow in its reliance on Russian pipeline gas.

Chief executive of Austrian energy group OMV Rainer Seele addresses a news conference in Vienna, Austria, August 2, 2018. REUTERS/Heinz-Peter Bader

European critics of Nord Stream 2 say Ukraine's gas transit business will suffer if the pipeline comes online, and say Ukraine's security concerns about Russia must also be addressed.

Companies and politicians backing the project say it is vital to secure future supply capacity.

"We are not investing in a dependency on Russia but in a diversification of gas transport routes into Europe," OMV's Seele said, adding Europe had underestimated how soon British and Dutch production would fall, raising the region's import needs.

(Reporting by Vera Eckert; Editing by Edmund Blair)

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