THE SHELL LEAKS FILES — 25 OCTOBER 2026
SLF-2007-098
The Sakhalin Papers LXXXVIII: The Thirty-Day Exit — Washington’s October 2020 Sanctions Ultimatum and the Companies Caught Between Two Legal Systems
On 20 October 2020, the United States gave companies supporting Nord Stream 2 a sharply defined choice: end certain activities within 30 days or face potential sanctions. The warning extended to businesses supplying equipment, facilities and services to the vessels needed to complete the Russian gas pipeline. An examination of the original Federal Register notice, Shell’s financial disclosures, German parliamentary records and contemporaneous reporting reveals how Washington used an expansive interpretation of existing legislation to intensify pressure on a project already facing serious regulatory and political difficulties.
Archive reference: SLF-2007-098
Publication date: 25 October 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-097, The Sakhalin Papers LXXXVII, 24 October 2026
Principal sources: US Department of State Public Notice 11236; Federal Register, 5 November 2020; Protecting Europe’s Energy Security Act of 2019; German Bundestag parliamentary records; European External Action Service statements; Shell’s authenticated April 2017 financing announcement; Shell’s 2022 Annual Report filed with the US Securities and Exchange Commission; contemporary S&P Global and Reuters reporting; and subsequent US government sanctions records.
Evidence classification: Authenticated government documents, statutory provisions, corporate disclosures, contemporaneous journalism, parliamentary records, judicial findings concerning separate European proceedings, and clearly identified editorial commentary.
INTRODUCTION: THIRTY DAYS TO GET OUT
On 20 October 2020, the United States Department of State issued a document that substantially increased the pressure on companies assisting construction of Nord Stream 2.
The document concerned the Protecting Europe’s Energy Security Act of 2019, generally known as PEESA.
Its central provision was presented as a clarification of existing legislation.
Washington explained that the statutory prohibition concerning the provision of vessels for pipeline construction could extend beyond the companies owning or leasing the ships.
It could potentially encompass businesses supplying goods, services, equipment, facilities or funding necessary for those vessels to operate.
For companies assisting Nord Stream 2, the implications were considerable.
A business did not necessarily have to own a pipe-laying vessel to face potential sanctions.
Supplying essential services to that vessel might also bring it within the American government’s interpretation of the legislation.
The State Department accompanied the clarification with a limited opportunity to withdraw.
Companies whose activities became covered by the revised interpretation could avoid sanctions under the specified provision by immediately beginning, and completing within 30 days, a genuine withdrawal from the activities concerned.
That was the essential message.
Stop providing the relevant services, or risk becoming subject to American sanctions.
The warning came just over two months after three American senators had threatened severe financial consequences for the operators of Mukran Port in Germany.
That earlier confrontation was examined in yesterday’s instalment.
The October guidance represented a different kind of intervention.
The senators’ letter had been a political warning.
The new document was an official statement of how the American executive branch intended to interpret and enforce existing legislation.
It was issued by the Department of State, which shared responsibilities under the legislation with the Department of the Treasury.
There is another detail worth examining.
The guidance took effect on 20 October 2020.
But it was not formally published in the Federal Register until 5 November 2020.
By then, more than half of the 30-day period had elapsed.
This does not mean the guidance was secret until November. It had already been made public through the State Department’s website on 20 October.
Nevertheless, the difference between the effective date and the later Federal Register publication is part of the documentary record.
Six years later, the original notice is still available.
It allows us to distinguish what American officials actually required from the broader political rhetoric surrounding Nord Stream 2.
It also reveals why companies supporting the pipeline faced increasingly difficult decisions about their existing contracts.
For Shell shareholders, the investigation has particular relevance.
Shell was one of five European companies financing Nord Stream 2.
The company had completed its loan instalments before the October clarification, but the commercial prospects of recovering that financing depended upon the project eventually becoming operational.
The distinction between a lender’s financial exposure and a contractor’s sanctions exposure is fundamental.
Shell had helped finance the pipeline. Washington was increasingly targeting the businesses needed to finish it.
The two forms of exposure were connected commercially, but they were not legally identical.
Primary document: US Federal Register — Public Notice 11236, effective 20 October 2020. govinfo.gov
1. THE ORIGINAL LAW: A SANCTIONS REGIME BUILT AROUND PIPE-LAYING VESSELS
The Protecting Europe’s Energy Security Act became law on 20 December 2019.
It formed part of the National Defense Authorization Act for Fiscal Year 2020.
Its central provision, Section 7503, established reporting requirements concerning vessels engaged in constructing Nord Stream 2 and TurkStream.
The legislation specifically addressed pipe-laying at depths of at least 100 feet below sea level.
It also required identification of foreign persons knowingly supplying, leasing or otherwise providing relevant vessels, or facilitating certain transactions involving them.
The Secretary of State, consulting the Secretary of the Treasury, was responsible for identifying the vessels and persons meeting the statutory criteria.
Sanctions against qualifying identified persons included restrictions on access to the United States and blocking of property subject to American jurisdiction.
But several qualifications were important.
The legislation contained exceptions concerning safety, protection of human life and prevention of environmental damage.
It also contained provisions addressing good-faith withdrawal and presidential waiver authority.
Most importantly, the statute did not automatically designate every company associated with Nord Stream 2.
Identification under the statutory process and the relevant legal conditions mattered.
The legislation’s immediate practical effect was nevertheless substantial.
Allseas, the Swiss-Dutch offshore construction contractor, suspended its pipe-laying work in December 2019.
Nord Stream 2’s developers were left seeking alternative vessels and construction arrangements.
The project continued, but its completion became more complicated.
That is the background against which Washington’s October 2020 clarification must be understood.
The original law targeted the provision of vessels.
The State Department was now examining how broadly that concept should be interpreted.
Statutory evidence: Protecting Europe’s Energy Security Act — Section 7503, US statutory record. MassPoint Legal PLLC
2. WHAT DID IT MEAN TO PROVIDE A VESSEL?
The central legal question was deceptively simple.
What did the original legislation mean when it referred to a person providing a vessel for pipeline construction?
An obvious interpretation would include a company selling or leasing a pipe-laying ship to Nord Stream 2.
But could the same language also apply to a company supplying specialised equipment?
What about a port operator providing facilities for vessel upgrades?
Or a business funding modifications needed before a ship could begin laying pipe?
These were not hypothetical questions.
Nord Stream 2 was attempting to complete construction using alternative Russian vessels.
Specialist ships such as Akademik Cherskiy and Fortuna were central to the effort.
Those vessels required logistical support, technical equipment and operational services.
The October guidance addressed this supporting infrastructure.
In its first frequently asked question, the State Department explained that the statutory language could extend to foreign companies providing goods or services necessary or essential to the provision or operation of qualifying pipe-laying vessels.
The examples included equipment upgrades, installation facilities and funding associated with those activities.
The significance was considerable.
A company could potentially face sanctions exposure without itself owning a pipe-laying vessel.
Washington was interpreting vessel provision as potentially encompassing an entire network of supporting commercial activities.
But the wording also contained an important limitation.
The guidance did not say that every supplier to Nord Stream 2 was automatically sanctionable.
Its interpretation concerned particular goods and services connected to the provision or operation of qualifying vessels.
The statutory requirements still applied.
The facts of each activity remained relevant.
A company supplying equipment essential to a vessel’s construction operations could occupy a different position from a business providing unrelated services.
Likewise, a lender financing the overall pipeline project did not necessarily have the same PEESA exposure as a company financing upgrades to a qualifying pipe-laying vessel.
The distinction is particularly relevant to Shell.
Shell’s role as a project financier was documented.
That did not automatically make it a provider of pipe-laying vessels under PEESA.
Primary evidence: Federal Register — PEESA Public Guidance, FAQ 1.
3. THE THIRTY-DAY PROVISION: NOT A BLANKET AMNESTY
The second frequently asked question is the most important passage in the October document.
It concerns companies whose activities became potentially sanctionable under the State Department’s expanded interpretation.
The Department explained that sanctions would not be imposed under the specified provision where the relevant persons immediately began and completed a good-faith withdrawal within 30 days.
The word immediately mattered.
The guidance did not provide an unconditional licence to continue every potentially sanctionable activity for another month.
It required genuine steps towards withdrawal.
Nor did it provide blanket immunity from every other American sanctions law.
The protection concerned the particular activities and authorities addressed by the clarification.
For a qualifying company, the practical questions were therefore immediate.
Could it stop supplying equipment?
Could it terminate ongoing technical services?
Could it withdraw personnel?
Could it cancel scheduled deliveries?
Could it cease work without endangering vessels or crews?
And could the withdrawal be completed within the prescribed period?
The guidance did not answer these questions for every company.
Instead, it established a condition that companies would need to satisfy.
The protection depended upon conduct, not merely an expression of intention.
A business announcing that it intended to withdraw was not necessarily in the same position as one that had actually ended the relevant activities.
Equally, the original document did not establish that every company continuing some form of relationship with Nord Stream 2 would automatically be sanctioned.
The nature of the continuing activity remained decisive.
The 30-day period began with the guidance issued on 20 October.
Calculated from that date, it extended to approximately 19 November 2020.
The Federal Register notice itself states the period as 30 days rather than specifying a separate calendar deadline.
That distinction should be preserved when citing the original document.
Primary evidence: Federal Register — PEESA Public Guidance, FAQ 2.
4. THE SAFETY EXCEPTIONS: WASHINGTON DID NOT REQUIRE EVERYTHING TO STOP
The State Department’s clarification also referred to statutory exceptions.
These are easily overlooked when the sanctions campaign is described in general terms.
Section 7503(e)(3) excluded certain provisions supplied to relevant vessels where the purpose was protecting crew safety, human life or preventing significant environmental damage.
Section 7503(e)(4) separately excluded specified activities connected with repair, maintenance and environmental remediation concerning the pipeline projects.
These provisions demonstrate that the sanctions framework was not intended to prohibit every possible interaction with a relevant vessel or pipeline.
Safety and environmental protection remained important statutory considerations.
There was therefore a distinction between supporting construction and undertaking activities necessary to prevent harm.
For a port operator, that distinction could matter considerably.
A vessel might require assistance to avoid environmental damage even if its construction-related operations were subject to sanctions.
Likewise, withdrawing from commercial services could require orderly arrangements to avoid creating additional safety risks.
But the existence of exceptions did not mean that all ordinary port services were automatically protected.
Whether an activity qualified would depend upon its actual purpose and the applicable statutory conditions.
A service genuinely necessary to prevent environmental damage occupied a different legal position from an equipment upgrade intended to make a pipe-laying vessel more effective.
This is why the exact language of the legislation and guidance matters.
The sanctions regime contained exceptions, but those exceptions were not unlimited. GovInfo
5. A REVEALING CHRONOLOGY: THE GUIDANCE WAS PUBLISHED TWICE
The dates surrounding the October guidance deserve particular attention.
The Department of State issued the clarification on 20 October 2020.
S&P Global reported the development that same day.
The State Department’s website made the guidance publicly available.
However, the formal Federal Register publication appeared on 5 November 2020.
The document was assigned Public Notice 11236.
It appeared in Volume 85, Number 215, at pages 70702–70703.
The notice expressly identified 20 October as its effective date.
Thus, there were two distinct public records.
The first was the State Department’s announcement and online guidance.
The second was the subsequent Federal Register publication.
By the time the Federal Register version appeared, approximately sixteen days had elapsed since the effective date.
Only about fourteen days remained within the stated 30-day period.
This was not necessarily unlawful.
Nor does the publication sequence establish that affected companies were unaware of the guidance before November.
Contemporaneous reporting confirms that the announcement attracted immediate attention on 20 October.
Nevertheless, the chronology matters when reconstructing how the sanctions pressure developed.
A reader relying exclusively upon the Federal Register publication date might incorrectly assume that the wind-down period commenced on 5 November.
It did not.
The guidance itself identified 20 October.
For historians, lawyers and companies attempting to reconstruct the applicable timetable, the distinction is essential.
An official publication date is not always the same as the effective date of the policy being published.
Authenticated source: US Government Publishing Office — Federal Register Notice 2020-24579.
6. CONTEMPORANEOUS REPORTING: THE IMMEDIATE EFFECT ON CONTRACTORS
On 20 October 2020, S&P Global journalist Meghan Gordon reported Washington’s announcement.
The report described the expanded interpretation and the requirement that relevant companies withdraw within 30 days to benefit from the stated protection.
It also examined the practical circumstances surrounding the vessels expected to complete Nord Stream 2.
One especially interesting detail concerned Akademik Cherskiy.
The vessel had spent several months at Mukran.
By early October, it had moved away from the German port.
S&P Global reported that the ship had departed Mukran on 1 October and was subsequently located near Kaliningrad.
The report cited analysis suggesting that technical modifications to the vessel might be relevant to the American sanctions pressure.
This was an interpretation advanced by an identified market analyst.
It should not be treated as proof that every movement or modification of the vessel resulted directly from American threats.
Nevertheless, the vessel’s movements demonstrate the operational context in which the October guidance appeared.
Nord Stream 2 was attempting to complete construction without the specialist contractor whose departure had disrupted the project in December 2019.
The use of alternative vessels required technical preparation.
The State Department’s guidance targeted precisely the kind of services and equipment that could assist those preparations.
The connection between the legal text and the practical construction problem was therefore clear.
Washington’s concern was not simply the ownership of the vessels.
It was the supporting activity necessary to make them capable of completing the pipeline.
Contemporaneous report: S&P Global — US Steps Up Sanctions Pressure on Nord Stream 2 Contractors, 20 October 2020. S&P Global
7. EUROPE’S RESPONSE: LEGITIMATE BUSINESS UNDER THREAT
The American sanctions campaign had already provoked a substantial European diplomatic response.
On 17 July 2020, Josep Borrell, the European Union’s High Representative for Foreign Affairs and Security Policy, issued an official statement.
He expressed concern about increasing American sanctions threats against European companies and interests.
His examples included Nord Stream 2 and TurkStream.
Borrell argued that European companies conducting legitimate business should not be subjected to extraterritorial sanctions imposed by third countries.
He also stated the EU position that such extraterritorial measures were contrary to international law.
This was the European Union’s stated legal and political position.
It was not a determination by an international court that every American sanctions measure concerning Nord Stream 2 was unlawful.
The distinction is important.
The United States maintained that the pipeline threatened European energy security and strengthened Russia’s geopolitical influence.
European institutions and governments were themselves divided over Nord Stream 2’s merits.
Germany remained supportive of its completion.
Other European governments, including Poland and several Baltic states, opposed the project because of concerns about dependence upon Russian gas and the consequences for Ukraine.
Opposition to American extraterritorial sanctions therefore did not necessarily mean unconditional support for the pipeline.
In August 2020, Reuters reported that representatives of 24 European Union Member States had participated in a diplomatic approach to the US State Department concerning the sanctions issue.
The European Commission confirmed that an informal diplomatic approach had taken place.
The dispute was becoming a serious transatlantic disagreement.
The parties were not simply debating energy policy. They were also disputing how far one country’s sanctions authority should extend into another jurisdiction.
Official source: European External Action Service — Josep Borrell’s Statement on US Sanctions, 17 July 2020.
Contemporaneous reporting: Reuters — EU Concern Over US Nord Stream 2 Sanctions, 14 August 2020. Pipeline and Gas Journal
8. THE GERMAN GOVERNMENT’S FORMAL POSITION
The German Bundestag provides a particularly valuable documentary source.
On 6 October 2020, two weeks before the new American clarification, the Bundestag published a summary of the government’s response to parliamentary questions about sanctions threats against Mukran Port.
The underlying document was Bundestag paper 19/22563.
The government confirmed that it was discussing the American sanctions threats with Washington.
It was also coordinating with European partners, the European External Action Service and the European Commission.
The response specifically addressed the August letter from US Senators Ted Cruz, Tom Cotton and Ron Johnson.
The German government maintained its opposition to unilateral extraterritorial sanctions directed against German and European companies.
It also stated that the Sassnitz port company should be able to continue its business activities despite the American threats.
There is a particularly revealing passage in the Bundestag’s summary.
The government recognised that American sanctions regimes could potentially affect businesses operating within the European Union even where their activities were lawful under their domestic legal systems.
This was a central problem.
A German company might be performing a contract permissible under German law.
But its continued performance could expose it to American sanctions consequences.
That did not necessarily mean the contract became invalid under German law.
Nor did it automatically mean that the company was legally required by Germany to comply with the American demand.
The problem lay in the interaction of the different legal systems.
European companies with American commercial interests could face severe practical consequences even where they disputed the jurisdictional basis of US sanctions.
The October 2020 clarification increased that pressure.
Primary parliamentary document: German Bundestag — Federal Government Opposes US Sanctions Against Nord Stream 2, 6 October 2020. Deutscher Bundestag
9. THE CONTRACTUAL PROBLEM: WHEN STOPPING WORK MAY ALSO HAVE CONSEQUENCES
The practical difficulty facing affected businesses can be explained without assuming that any particular company acted unlawfully.
Consider a hypothetical engineering company.
It has an existing contract to install equipment aboard a specialised pipe-laying vessel.
The contract is governed by European law.
Its customer expects the work to be completed.
The engineering company may have purchased equipment, engaged subcontractors and allocated specialist personnel.
Then the American government publishes guidance indicating that continued performance of certain activities could lead to sanctions.
The company now faces several questions.
Can it terminate the contract?
Does the agreement contain an applicable sanctions clause?
Would stopping work expose it to damages claims?
Could force majeure provisions apply?
Does the contract contain provisions addressing changes in law or sanctions?
Could withdrawal endanger personnel or equipment?
And is the company’s activity actually within the scope of the American legislation?
These questions cannot be resolved by examining the American guidance alone.
The contractual documents would be essential.
The applicable national law would also matter.
The company’s actual activities would need to be established.
A general warning about sanctions does not prove that every affected business was entitled to terminate its contracts without consequence.
Equally, the fact that a contract remained valid under domestic law would not necessarily protect the company against American sanctions.
This is the difficult environment that the October guidance created or intensified for relevant contractors.
The historical record establishes the legal and political pressure.
It does not establish the contractual position of every individual company.
No finding should be made about a particular contractor’s legal rights without examining its actual agreements.
10. WHAT SHELL’S ORIGINAL DOCUMENTS TELL US
Shell’s position must be examined separately from that of the construction contractors.
The company’s involvement began with the financing agreement announced on 24 April 2017.
Shell’s original corporate announcement named ENGIE, OMV, Uniper and Wintershall as the other participating European companies.
Each agreed to provide financing and guarantees representing up to 10% of the estimated €9.5 billion project cost.
The announcement identified a long-term funding facility of €285 million, together with additional potential funding and guarantees of up to €665 million.
Gazprom remained the sole shareholder of Nord Stream 2 AG.
These details are important.
Shell was not the owner of the pipeline company.
It was not the operator of Mukran Port.
It was not identified as the owner of Fortuna or Akademik Cherskiy.
Its documented relationship was principally financial.
A lender can have an interest in the successful completion of a construction project without directing the contractors undertaking the work.
Shell’s financial exposure therefore created a commercial connection with the activities being targeted by Washington.
But that connection alone did not establish that Shell was providing vessels or services covered by the October PEESA clarification.
Nor is there evidence in the examined documents that Shell was sanctioned under PEESA in connection with those activities.
Authenticated Shell document: Shell — Corporate Press Releases 2017, Nord Stream 2 Financing Announcement, page 40.
11. A CRUCIAL FINANCIAL DETAIL: SHELL HAD ALREADY COMPLETED ITS LOAN PAYMENTS
Shell’s subsequent financial reporting supplies an important chronological clarification.
In its 2022 Annual Report and Accounts, filed with the US Securities and Exchange Commission in March 2023, Shell confirmed that the final Nord Stream 2 loan instalments had been made during the second quarter of 2020.
That quarter ended on 30 June.
The State Department’s October clarification came almost four months later.
Consequently, the original Shell disclosure does not establish any loan disbursement after the October guidance took effect.
Nor does it establish that Shell supplied equipment or services to the pipe-laying vessels covered by the clarification.
These distinctions matter.
The financing obligations described in Shell’s April 2017 announcement were connected with the overall Nord Stream 2 project.
The October 2020 PEESA clarification concerned particular activities associated with qualifying pipe-laying vessels.
The separate July 2020 CAATSA Section 232 guidance, examined in an earlier instalment, addressed a broader category of investment and support activities.
The two sanctions mechanisms should not be treated as identical.
Shell’s position as a financier might have required assessment under the applicable sanctions rules.
But the available documents do not justify a conclusion that the company breached those rules.
For shareholders, the more significant established fact is that Shell’s money remained exposed to a project whose completion was increasingly uncertain.
The outstanding financial exposure did not disappear merely because the final instalments had been made.
SEC-filed primary evidence: Shell Annual Report and Accounts 2022 — Nord Stream 2 Disclosure, Note 6. SEC
12. DECEMBER 2020: CONSTRUCTION RESUMES DESPITE THE SANCTIONS PRESSURE
The next development demonstrates why the October guidance did not immediately settle the project’s fate.
On 11 December 2020, Reuters reported that Nord Stream 2 had resumed pipe-laying operations.
The project company confirmed that Fortuna would lay a section of pipeline approximately 2.6 kilometres long in German waters.
The work followed almost a year of interrupted offshore construction.
The December operation was comparatively limited.
It concerned a section in shallow German waters.
But its symbolic significance was considerable.
Despite American sanctions pressure and the withdrawal of Allseas, construction had resumed.
The development demonstrates that the October 30-day provision did not cause every participant to abandon Nord Stream 2.
Russian construction resources were still being deployed.
The pipeline company continued attempting to finish the project.
However, the resumption of work did not establish that all relevant companies were free from potential sanctions exposure.
Nor did it establish that every remaining section of the pipeline could be completed under the same circumstances.
Different water depths, vessels, technical services and legal provisions could raise different questions.
The original PEESA legislation contained a depth threshold for relevant pipe-laying operations.
The project’s remaining sections did not all necessarily present identical legal circumstances.
The wider sanctions framework also included authorities beyond the original PEESA provisions.
The December operation therefore showed that construction remained possible.
It did not establish that Washington’s pressure had become irrelevant.
Contemporaneous Reuters report: Russia Restarts Nord Stream 2 Construction Despite US Sanctions, 11 December 2020. gCaptain
13. JANUARY 2021: CONGRESS EXPANDS THE LAW ITSELF
The October 2020 guidance was not the final stage of the American sanctions campaign.
On 1 January 2021, the Fiscal Year 2021 National Defense Authorization Act became law.
Section 1242 amended PEESA.
The amendments expanded the activities covered by the sanctions framework.
They expressly addressed additional forms of support for qualifying pipe-laying vessels.
These included particular insurance and reinsurance services.
The amendments also addressed certain technical upgrades, equipment installation and other services necessary or essential to the project’s completion.
Significantly, the expanded law covered specified testing, inspection and certification services associated with completing or operating Nord Stream 2.
This was an important development.
The October 2020 guidance had interpreted existing statutory language expansively.
The January 2021 amendments introduced additional express statutory categories.
The distinction matters.
An administrative interpretation of existing legislation is not the same thing as Congress enacting new statutory language.
The 2021 amendments also contained a separate wind-down provision.
The State Department’s subsequent April 2021 guidance identified 31 January 2021 as the relevant date for the additional wind-down arrangements established by the January amendments.
That was a different period from the one associated with the October 2020 clarification.
There were therefore two distinct developments:
The October 2020 administrative clarification and its conditional 30-day withdrawal provision.
The January 2021 legislative amendments and their separate transitional arrangements.
They should not be confused.
Official source: US Department of State — PEESA as Amended, Guidance Published 9 April 2021. State.gov
14. THE EFFECT BECOMES VISIBLE: A CERTIFICATION COMPANY WITHDRAWS
The January 2021 amendments produced an important documented response.
DNV GL, the Norway-based assurance and technical verification company, announced that it would cease verification activities associated with Nord Stream 2.
On 4 January 2021, S&P Global reported the company’s withdrawal.
DNV GL had been engaged to verify the pipeline’s technical integrity.
Its involvement was relevant to demonstrating compliance with the technical and safety requirements governing the project.
The company explained that it could no longer provide the relevant verification services while the sanctions remained applicable.
It also indicated that it would be unable to issue the certificate originally contemplated upon completion.
This represented a different category of problem from the earlier interruption to pipe-laying.
A pipeline may be physically constructed but still require technical certification and regulatory approval before it can enter service.
Thus, even successful completion of the offshore installation work would not necessarily make Nord Stream 2 commercially operational.
The withdrawal of a major certification provider created a further obstacle.
But the timing must be distinguished carefully.
DNV GL’s January 2021 announcement followed the newly enacted statutory amendments.
It should not be attributed solely to the October 2020 administrative clarification.
The October guidance formed part of an escalating campaign.
The January legislation expanded that campaign further.
Contemporaneous evidence: S&P Global — DNV GL Halts Nord Stream 2 Certification Work, 4 January 2021.
15. THE SANCTIONS THREAT WAS NOT MERELY THEORETICAL
Subsequent American government records confirm that the sanctions campaign progressed beyond warnings.
On 19 January 2021, the United States announced sanctions against the Russian company KVT-RUS.
The vessel Fortuna was identified as blocked property.
The action was taken under CAATSA Section 232.
This is an important legal distinction.
Although the original October guidance concerned PEESA, the January action against KVT-RUS was announced under a separate statutory authority.
The existence of several applicable sanctions laws therefore mattered in practice.
American officials could pursue relevant activities under different provisions where the legal conditions were satisfied.
The sanctions announcement demonstrates that the United States was prepared to impose actual penalties against participants associated with Nord Stream 2.
But it does not establish that Shell, Mukran Port or every other company mentioned in the political controversy was sanctioned.
Sanctions designations are specific government actions.
They should not be inferred merely from a company’s association with a project.
The official record therefore supports a distinction between the broad sanctions campaign and the particular persons against whom measures were imposed.
US government evidence: Department of State — Sanctions on KVT-RUS and Fortuna, 19 January 2021. S&P Global
16. A FURTHER OFFICIAL DISCLOSURE: MORE THAN FIFTEEN ENTITIES WERE WINDING DOWN
A later State Department briefing adds another important dimension.
On 22 February 2021, Department spokesman Ned Price discussed the administration’s reporting concerning Nord Stream 2 sanctions.
He explained that the report included more than fifteen entities that had undertaken good-faith efforts to wind down relevant activities.
The Department stated that those entities were not being subjected to sanctions at that time.
This is valuable evidence because it demonstrates that withdrawal arrangements were not merely theoretical provisions.
The American government was recording the activities of companies that had taken steps to disengage.
It also illustrates the conditional nature of the sanctions process.
Companies could be identified as withdrawing without necessarily being sanctioned.
However, this disclosure does not establish which companies relied specifically upon the October 2020 30-day provision.
The February briefing concerned the broader sanctions framework as it stood following the January 2021 amendments.
It would therefore be incorrect to attribute all the withdrawals to the October guidance alone.
The official statement does nevertheless demonstrate the broader effect of the sanctions campaign.
Some companies were withdrawing from activities associated with Nord Stream 2, and the State Department was taking those efforts into account.
Official record: US Department of State — Press Briefing, 22 February 2021.
17. THE EUROPEAN COURT RECORD: A SEPARATE LEGAL QUESTION
Nord Stream 2 was also involved in substantial litigation over European gas-market regulation.
That litigation must be distinguished from the American sanctions dispute.
On 27 November 2024, the General Court of the European Union delivered judgment in Case T-526/19 RENV.
The claimant was Nord Stream 2 AG.
The defendants were the European Parliament and the Council of the European Union.
The case concerned Directive (EU) 2019/692, which extended relevant European gas-market rules to pipelines connecting Member States with countries outside the Union.
The General Court dismissed Nord Stream 2 AG’s challenge.
Its judgment addressed questions including legal certainty, legitimate expectations, equal treatment and proportionality.
The court did not determine whether the October 2020 American sanctions guidance was lawful.
It did not decide whether American secondary sanctions conflicted with international law.
It did not determine the contractual rights of businesses withdrawing from Nord Stream 2.
And it made no finding that Shell had violated the American sanctions regime.
The judgment is relevant because it forms part of the project’s wider legal history.
It demonstrates that Nord Stream 2 encountered legal obstacles in both European and American regulatory systems.
But those obstacles arose under different laws and involved different legal questions.
The existence of a judicial decision concerning European gas regulation must not be presented as a judicial determination concerning American sanctions.
Official judicial record: General Court of the European Union — Nord Stream 2 v Parliament and Council, Judgment of 27 November 2024.
18. SHELL’S FINANCIAL LOSS: THE CONNECTION AND ITS LIMITS
Shell’s financial exposure eventually produced a substantial accounting loss.
Following Russia’s full-scale invasion of Ukraine in February 2022, Shell announced its intention to end involvement in Nord Stream 2 and withdraw from Russian ventures.
In its subsequent financial reporting, the company confirmed that it had fully written down its Nord Stream 2 loan during the first quarter of 2022.
The amount was $1,126 million.
The same disclosures confirm that Shell’s final loan instalments had been made during the second quarter of 2020.
These are established corporate facts.
But their significance must be interpreted carefully.
The October 2020 guidance was directed at particular activities associated with the construction vessels.
Shell’s documented financing commitment was a different form of commercial participation.
The available records do not establish that Shell was required to withdraw under the October PEESA clarification.
Nor do they establish that Shell received a specific 30-day ultimatum from the State Department.
The guidance nevertheless formed part of the deteriorating external conditions affecting the project.
A major infrastructure investment depends upon more than the availability of finance.
It requires construction contractors.
It requires specialised equipment.
It requires technical services.
It requires inspection and certification.
And it requires the legal authority to operate.
Sanctions pressure affecting those activities could impair the commercial prospects of the overall project even where the principal financiers were not themselves sanctioned.
That is the legitimate connection to Shell.
The October 2020 clarification increased pressure on the project’s supporting infrastructure. Shell remained financially exposed to the project’s success or failure.
The documents do not establish that the October clarification independently caused Shell’s eventual impairment.
The geopolitical events of 2022 introduced far more extensive consequences.
The distinction between contributing circumstances and the eventual cause of an accounting write-down must be maintained.
Primary Shell evidence: Shell Annual Report and Accounts 2022 — SEC Filing, Note 6. SEC
DOCUMENTARY FINDINGS
ESTABLISHED FACTS
The Protecting Europe’s Energy Security Act became law on 20 December 2019.
Its original provisions addressed qualifying vessels engaged in deep-water pipe-laying for Nord Stream 2 and TurkStream, together with certain persons supplying or facilitating those vessels.
On 20 October 2020, the US Department of State issued guidance interpreting the statutory term concerning the provision of vessels more broadly.
The guidance identified certain services, facilities, equipment upgrades and associated funding as activities potentially falling within the sanctions framework.
It offered qualifying persons protection from sanctions under the specified provision if they immediately began and completed a good-faith withdrawal within 30 days.
The guidance did not provide unconditional immunity from every sanctions regime.
The clarification became effective on 20 October 2020.
It was formally published in the Federal Register on 5 November 2020.
The original PEESA legislation contained statutory exceptions concerning safety, maintenance and environmental protection.
The German government opposed American extraterritorial sanctions against German and European companies.
The European Union had publicly objected to the expanded use of American secondary sanctions.
Shell and four other European companies had signed Nord Stream 2 financing agreements in April 2017.
Shell’s final loan instalments were made during the second quarter of 2020, before the October guidance.
Nord Stream 2 resumed limited pipe-laying operations in German waters during December 2020.
Congress expanded PEESA through legislation enacted on 1 January 2021.
The amended legislation expressly addressed additional services, including certain insurance, testing, inspection and certification activities.
DNV GL announced its withdrawal from Nord Stream 2 verification work in January 2021.
The United States subsequently imposed sanctions against KVT-RUS and identified Fortuna as blocked property under CAATSA Section 232.
In February 2021, the State Department reported that more than fifteen entities had undertaken good-faith efforts to wind down relevant activities.
Shell recognised a full $1.126 billion write-down of its Nord Stream 2 loan during the first quarter of 2022.
DOCUMENTED POSITIONS AND CONTESTED INTERPRETATIONS
The United States maintained that Nord Stream 2 threatened European energy security and increased Russian geopolitical influence.
The State Department interpreted the original PEESA legislation as potentially encompassing certain services necessary or essential to qualifying pipe-laying vessels.
European officials disputed the legitimacy of American extraterritorial sanctions against European companies conducting lawful business.
Germany maintained that companies operating within its jurisdiction should not be subjected to unilateral American pressure in circumstances it considered objectionable.
These were documented governmental positions.
They do not establish that every interpretation advanced by either side was subsequently endorsed by a court.
Nor do the statements establish the legal rights of every company affected by the sanctions campaign.
MATTERS NOT ESTABLISHED
The examined evidence does not establish that Shell violated PEESA or CAATSA.
It does not establish that Shell was specifically ordered to withdraw under the October 2020 guidance.
It does not establish that Shell provided the vessels or equipment upgrades addressed by the clarification.
It does not establish that Shell made additional Nord Stream 2 loan disbursements after the October guidance became effective.
It does not establish that every company supporting Nord Stream 2 was automatically subject to sanctions.
It does not establish that all companies had an unconditional 30-day exemption from sanctions.
It does not establish that the original PEESA legislation prohibited essential safety or environmental protection activities.
It does not establish that a particular European contractor could terminate its contracts without legal or financial consequences.
It does not establish that the European General Court adjudicated the legality of American sanctions against Nord Stream 2 contractors.
And it does not establish that Washington’s October 2020 clarification independently caused Shell’s subsequent financial loss.
These limitations are essential to a fair documentary account.
EDITORIAL COMMENTARY: THE POWER OF A THREAT THAT MAY NEVER NEED TO BE ENFORCED
There is a broader lesson in the October 2020 sanctions episode.
Governments do not necessarily have to impose penalties against every company in order to influence commercial behaviour.
Sometimes the prospect of sanctions is sufficient.
International companies depend upon access to financial institutions, insurance markets, international suppliers and commercial customers.
A business conducting lawful operations in one jurisdiction may nevertheless be vulnerable to restrictions imposed by another major economic power.
That vulnerability can influence decisions even where the company disputes the legal justification for the threatened measures.
The Nord Stream 2 sanctions campaign demonstrates this mechanism.
The United States initially targeted specialist pipe-laying vessels.
Allseas stopped work.
Russian vessels were then prepared to complete construction.
Washington expanded its interpretation of the support activities that could attract sanctions.
Congress subsequently broadened the legislation.
Certification companies and other service providers were drawn into the dispute.
The process did not depend upon every company receiving an individual sanctions designation.
The legal risk itself could affect commercial decisions.
But the October 2020 document also illustrates why the precise wording matters.
The State Department did not simply announce that all businesses connected with Nord Stream 2 had thirty days to abandon the project.
It interpreted particular statutory provisions.
It identified relevant forms of commercial support.
It established conditional protection for qualifying withdrawal activities.
And it preserved the statutory exceptions concerning safety and environmental protection.
Those qualifications may be less dramatic than the political rhetoric.
They are nevertheless indispensable to an accurate understanding of the events.
For Shell shareholders, the episode illustrates another distinction.
A financial investor may be exposed to the consequences of sanctions affecting companies over which it has no direct control.
Shell helped finance Nord Stream 2.
That did not mean Shell owned the construction vessels or directed the work of the contractors.
But the project’s commercial success depended upon the completion of construction and the ability to operate.
When the supporting network became subject to increasing sanctions pressure, the overall investment became more uncertain.
The company’s eventual $1.126 billion write-down demonstrates the scale of its financial exposure.
It does not establish that Shell itself was sanctioned.
Nor does it establish that any particular executive breached a duty.
Those conclusions would require different evidence.
What the archive can establish is the chronology.
An international financing arrangement was created in 2017.
Construction was disrupted by American sanctions in 2019.
The sanctions framework expanded during 2020.
Additional legislation followed in 2021.
Then the Russian invasion of Ukraine transformed the entire project’s prospects.
Each development belongs to the historical record.
Each had different legal and commercial consequences.
And each must be examined without confusing political assertions, statutory obligations, corporate decisions and judicial findings.
The October 2020 ultimatum illustrates how sanctions can affect an investment not merely by targeting its financiers, but by making the infrastructure needed to complete it progressively harder to obtain.
That is the significance of the thirty-day exit.
It was a legal mechanism designed to encourage disengagement.
It also formed part of a larger campaign whose effects extended far beyond the companies directly threatened.
For an independent archive examining Shell’s historical exposure to Russia, those distinctions are more valuable than any unsupported accusation.
The documents establish the pressure.
They identify the legal mechanisms.
They preserve the competing positions.
And they allow readers to understand why a project financed years earlier could become entangled in a succession of changing laws and political decisions.
The purpose of The Shell Leaks Files is not to replace evidence with hindsight. It is to make the evidence available so that hindsight can be tested against the historical record.
SOURCE RECORD AND DOCUMENTARY PROVENANCE
The following authenticated documents and contemporary sources form the principal evidential foundation of this instalment.
1. United States Department of State — 20 October 2020
Public Notice 11236: Guidance under the Protecting Europe’s Energy Security Act.
This is the central primary document. It contains the expanded interpretation of vessel provision, the conditional 30-day wind-down provision and the relevant statutory exceptions.
Effective date: 20 October 2020.
Federal Register publication: 5 November 2020.
Pages 70702–70703.
Read the original Federal Register notice
2. United States Congress — 20 December 2019
Protecting Europe’s Energy Security Act of 2019, Section 7503.
Establishes the original vessel-related sanctions framework, reporting requirements, sanctions consequences and statutory exceptions.
Read the statutory provisions and legislative history
3. S&P Global — 20 October 2020
US Steps Up Sanctions Pressure on Nord Stream 2 Gas Pipeline Contractors.
Contemporaneous reporting by Meghan Gordon explaining the immediate significance of the guidance, the 30-day provision and developments involving Akademik Cherskiy.
Read the contemporary S&P Global report
4. European External Action Service — 17 July 2020
Statement by High Representative Josep Borrell on US Sanctions.
Official European position opposing the extraterritorial application of American sanctions against European companies undertaking legitimate commercial activities.
Read the original European statement
5. German Bundestag — 6 October 2020
Federal Government Response Concerning US Sanctions Against Nord Stream 2.
Parliamentary document 19/22563.
Confirms Germany’s opposition to the threatened measures, its discussions with Washington and coordination with European institutions.
Read the official Bundestag record
6. Royal Dutch Shell plc — 24 April 2017
Shell and Four European Energy Companies Sign Financing Agreements with Nord Stream 2 AG.
Shell’s authenticated corporate announcement identifies the five European financiers, the financing limits and Gazprom’s sole ownership of Nord Stream 2 AG.
Page 40 of Shell’s 2017 corporate press release collection.
Read Shell’s original corporate announcement
7. Reuters — 11 December 2020
Russia Restarts Nord Stream 2 Pipeline Construction Despite US Sanctions.
Contemporaneous reporting establishing that Fortuna resumed limited pipe-laying operations in German waters.
8. United States Department of State — 9 April 2021
Protecting Europe’s Energy Security Act, as Amended.
Official explanation of the expanded statutory framework enacted on 1 January 2021, including the additional categories of potentially sanctionable activities and separate wind-down arrangements.
Read the amended PEESA guidance
9. S&P Global — 4 January 2021
DNV GL Halts Nord Stream 2 Certification Work on US Sanctions.
Contemporaneous reporting documenting the withdrawal of a major technical verification company following the January 2021 legislative amendments.
Read the DNV GL withdrawal report
10. United States Department of State — 19 January 2021
Sanctions on KVT-RUS and the Vessel Fortuna.
Official announcement confirming an actual sanctions action under CAATSA Section 232.
Read the US government sanctions announcement
11. United States Department of State — 22 February 2021
Department Press Briefing Concerning Nord Stream 2 Sanctions Reporting.
Records the Department’s statement that more than fifteen entities had undertaken good-faith efforts to wind down relevant activities.
Read the original State Department briefing
12. Shell plc — Annual Report and Accounts 2022
US Securities and Exchange Commission Filing, March 2023.
Confirms that Shell’s final Nord Stream 2 loan instalments were made during the second quarter of 2020 and that the company recognised a full $1.126 billion write-down during the first quarter of 2022.
Read Shell’s authenticated SEC filing
13. General Court of the European Union — 27 November 2024
Case T-526/19 RENV, Nord Stream 2 AG v European Parliament and Council.
Judicial determination concerning the European Gas Directive. Included to distinguish the separate European regulatory litigation from the American sanctions dispute.
Read the official judicial record
DOCUMENTARY DISCLAIMER
This instalment distinguishes authenticated statutory provisions, administrative guidance, corporate disclosures, parliamentary records and judicial findings from political assertions, disputed interpretations and editorial commentary.
The 20 October 2020 State Department guidance concerned particular activities associated with qualifying pipe-laying vessels. It did not automatically establish that Shell or every other participant in Nord Stream 2 had committed a sanctions violation.
The 30-day wind-down provision was conditional. It was not an unconditional exemption from all American sanctions legislation.
The subsequent January 2021 statutory amendments are distinguished from the October 2020 administrative clarification.
The European General Court judgment referenced in this instalment concerned separate European gas-market legislation and did not adjudicate the legality of American sanctions against Shell or Nord Stream 2 contractors.
No allegation is made that Shell’s directors deliberately violated sanctions legislation, concealed relevant information or could have withdrawn from their financing agreements without contractual consequences.
The original documents establish the relevant public chronology. They do not disclose every internal corporate assessment or contractual provision.
Further authenticated documents, factual corrections and responses from Shell and the other parties concerned remain welcome.
The website’s general disclaimer also applies.
NEXT IN THE SHELL LEAKS FILES
SLF-2007-099 — The Sakhalin Papers LXXXIX: The Certificate That Never Came — How American Sanctions Drove a European Safety Assessor Away from Nord Stream 2
The next instalment will examine a particularly consequential development in January 2021.
Nord Stream 2 had already experienced serious construction delays.
American sanctions had driven Allseas away from the project.
Russia was attempting to complete the remaining pipeline sections using alternative vessels.
Then a different problem emerged.
The company expected to verify the pipeline’s technical integrity announced that it was withdrawing.
DNV GL, the Norway-based assurance and certification organisation, had been engaged to examine whether Nord Stream 2 met relevant technical and safety requirements.
Its work was connected with the certification arrangements needed before the pipeline could enter commercial operation.
Following the expansion of American sanctions legislation on 1 January 2021, DNV GL announced that it would cease the relevant verification activities.
This raises several important documentary questions.
What precisely had DNV GL agreed to certify?
Which requirements were imposed by the Danish and German regulatory authorities?
What did the company’s withdrawal mean for the project’s ability to obtain the necessary approvals?
Could another certification organisation readily replace it?
And what were the implications for Shell and the other European companies that had already advanced substantial financing?
The next investigation will examine DNV GL’s original statements, the January 2021 statutory amendments, Danish regulatory records, contemporary reporting and the subsequent developments in the project’s certification process.
It will also distinguish the different forms of approval involved.
Technical verification is not necessarily the same as regulatory authorisation to operate.
A company completing physical construction does not automatically possess every certificate or licence needed to begin commercial service.
The distinction proved particularly important in the Nord Stream 2 story.
Because by the beginning of 2021, the problem was no longer simply whether the pipeline could be built.
It was whether the companies responsible for confirming that it could safely and lawfully operate would remain involved.
The vessels could lay the pipes.
The contractors could complete the construction.
But who would certify the finished pipeline?
The Sakhalin Papers continue.
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