OGZPY PJSC Gazprom (PK)

By Paul Sonne 

WASHINGTON -- The top State Department official overseeing Europe offered harsh words Tuesday for Germany over the country's continued support for a new Russian gas pipeline to Europe, while praising Denmark for passing a law that could hamper the project.

A. Wess Mitchell, assistant secretary of State for European and Eurasian affairs, said the formation of a new government in Germany offers an opportunity for the U.S. to make a renewed case against the Russian pipeline, known as Nord Stream 2, which Washington says will give Moscow more leverage over Europe's energy supply.

He said the new government gives the U.S. a chance to call on Germany "to show responsibility in a European context."

"On energy security, Germany gets it wrong," Mr. Mitchell said in testimony to the Senate Foreign Relations Committee, referring to the country's support for the Russian gas pipeline. "And it gets it wrong in a way that hurts other EU member states."

A spokeswoman for the German economics ministry declined to comment on Mr. Mitchell's criticism of Germany. "For us, Nord Stream 2 is a corporate project," said spokeswoman Tanja Alemany.

Mr. Mitchell praised Denmark for a law allowing the country to block pipelines from traversing its territorial waters on foreign policy or security grounds.

Mr. Mitchell said that other countries whose territorial waters would be traversed by the Russian pipeline are also considering where they stand on the project, looking, for example, at the environmental effects.

The Russian pipeline project, a wholly owned subsidiary of Russian state energy giant Gazprom, would double Russia's export capacity by adding a second link between Russia and Germany. Secretary of State Rex Tillerson in a speech in late November described the pipeline as unwise. He argued that Nord Stream 2 and another Russian pipeline project known as TurkStream would only increase market dominance for a single supplier to Europe, namely Russia.

The opposition by Mr. Tillerson and the State Department indicates how core tenets of U.S. foreign policy toward Russia have continued, even though President Donald Trump has defended Russian President Vladimir Putin's denial that Moscow interfered in the 2016 election, as U.S. intelligence agencies have concluded.

A $10 billion project, Nord Stream 2 had been planned as a joint venture that includes Royal Dutch Shell PLC, Wintershall AG, Uniper SE, OMV AG and Engie SA, but Polish regulators scuttled that arrangement. The companies are still backing the project, even though it is now wholly owned by Gazprom and based in Switzerland.

Mr. Mitchell said Russia is well-versed in using energy supplies as a weapon against Europe and its neighbors. A Russian sanctions bill passed by Congress and signed by Mr. Trump earlier this year included a provision that allows the U.S. administration to introduce new restrictions against companies involved in Russian energy projects such as Nord Stream 2.

Germany balked at the provision -- which permits new restrictions rather than mandating them -- and accused the U.S. of meddling in Europe's energy supply. Companies involved in the project accused U.S. lawmakers of trying to shore up U.S. liquefied-natural-gas exports to Europe by blocking the Russian transport route.

Mr. Mitchell, asked whether the administration was taking advantage of the new provision under the sanctions law, said the State Department was continuing to express opposition on a regular basis and promote alternatives to Nord Stream 2. But he said the U.S. administration remained wary of breaking unity with European counterparts on other Russian sanctions separate from the pipeline dispute.

"We didn't want to open up new gaps between ourselves and allies at a moment when we need to hold ranks on new sanctions across the board," Mr. Mitchell said.

Sebastian Sass, Nord Stream 2 AG's European Union representative, said the project was in the interest of European energy security, contrary to Mr. Mitchell's argument. "It would be absurd to claim that this cooperation is about using gas as a political weapon," Mr. Sass said.

With plenty of capacity for liquefied-natural-gas imports to Europe from several countries, Mr. Sass said, no supplier is in the position to use gas supply as a vehicle for political influence.

--Emre Peker in Brussels and

Andrea Thomas

in Berlin contributed to this article.

Write to Paul Sonne at paul.sonne@wsj.com

(END) Dow Jones Newswires

December 12, 2017 18:59 ET (23:59 GMT)

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