Washington/Berlin - The contracting company laying the deep-sea Nord Stream 2 pipeline announced it was halting all work on Saturday, just hours after a US sanctions regime aimed at stopping the controversial project came into effect.

US sanctions on Nord Stream 2

Most of the work on the pipeline - which would allow Russia to significantly increase gas imports to Germany via the Baltic Sea - has already been completed, with only some 300 kilometres of construction left of the 2,400 required by the project.

Allseas, the Swiss-based company laying the pipeline, announced just hours after US President Donald Trump signed the sanctions into law that it had "suspended its Nord Stream 2 pipelay activities."

Russia insisted it would move ahead with the project despite the sanctions, while the consortium behind Nord Stream 2 confirmed that it would flout sanctions by continuing construction as soon as possible.

European officials said they were examining how to respond to the sanctions, while the German and Russian governments roundly condemned the move by Washington, which seeks to reduce its allies' dependence on Russian gas.

Interference in internal affairs

"Such sanctions are a serious interference in the internal affairs of Germany and Europe, and their sovereignty," German Finance Minister Olaf Scholz told public broadcaster ARD.

"For us it's clear that we will not accept the imposition of such a sanction," said Scholz, adding that it contradicted the countries' relationship as NATO allies.

The project risks a rupture in relations between Berlin and Washington. Ties have eroded since President Donald Trump took office, with the US lamenting its trade deficit with Germany and Berlin's refusal to hit defence spending targets.

The German government said that it "rejects these kinds of extraterritorial sanctions."

Government deputy spokeswoman Ulrike Demmer said that they "affect German and European companies and constitute an interference in our internal affairs."

More political context

There had been worries that Nord Stream 2 would weaken Ukraine in its long-running confrontation with Russia.

The issue was critical for the European Union, as several member states rely on natural gas delivered through Ukraine from Russia, an energy supply that has often been interrupted due to disputes.

In addition to Germany, Russia condemned Washington's move, with Dmitry Novikov, a member of the Russian Duma, saying the US government was trying to sideline Russia in the European energy market.

The goal is to prevent the construction of the pipeline from being finished, "but there are also even bigger political tasks in connection with a maximal weakening of Russia," Novikov told Russian news agency Interfax.

His comments were in line with remarks from Russian President Vladimir Putin's spokesman, Dmitry Peskov, who earlier in the week called the sanctions a "direct violation of international law and an ideal example of unfair competition."

A map shows the Nord Stream gas pipelines from Russia to Germany

All work must be halted

Trump has long complained about the Nord Stream 2 project, arguing that NATO members should not rely on the US for security and on Russia for energy.

The sanctions targeting Nord Stream 2, as well as a Russian project through Turkey known as Turkstream, were part of a massive defence spending bill, known as the NDAA, which passed Congress this month and was signed into law by Trump at a ceremony on Friday.

Two US senators, Ted Cruz and Ron Johnson, who shepherded the sanctions into law, wrote a scathing bipartisan letter this week, warning that continuing work on the pipeline "for even a single day" would expose those involved to "crushing" sanctions.

The sanctions were designed such that all relevant firms must stop work the moment the bill became law, even as the US administration has 60 days to act to identify violators and impose punishment.

Cruz and Johnson made clear that any effort to hurry up work and finish the project during a brief "wind-down" period would still lead to sanctions, which could be imposed not only on the company but on shareholders and other stakeholders.