Shariq Khan, Aziz El Yaakoubi

(Reuters.) – A Swiss-based company that built Nord Stream 2 from Russia to Germany may file for insolvency. This is as the company attempts to settle claims prior to a U.S. sanction deadline that would force other entities not to do business with them.

Following Russia’s recognition of two separatist regions in Ukraine, last week the United States sanctioned Nord Stream 2 AG. The move follows a series of economic sanctions.

Nord Stream 2 AG is registered in Switzerland. It is owned by Gazprom, a Russian gas giant. The $11 billion project was completed last year. This project was to increase the gas flow from Russia to Germany.

Two sources spoke under oath because of the confidential nature of talks regarding a possible insolvency. They said Nord Stream 2 AG had been in contact with a financial advisor to clear some of its liabilities. The company could formalize insolvency proceedings before a Swiss court this week.

Nord Stream 2 AG didn’t comment on potential insolvency. Gazprom refused to comment.

Because the 1,230km (767 miles) pipeline was still awaiting certification in Germany, it had yet to begin commercial operation. This decision came as a consequence of Ukraine’s escalating crisis.

On February 23, the U.S. Treasury Department’s Office of Foreign Assets Control approved an executive order authorizing “the winding down of transactions involving Nord Stream 2 AG”, or any entity in which Nord Stream 2 AG has, directly or indirectly,” by March 2.

Gazprom was able to pay half of Nord Stream 2’s construction costs. The remainder of Nord Stream 2’s $11 billion project was funded by Shell, OMV Austria and Engie France.

Engie and Shell did not respond immediately to inquiries for comment. OMV did not respond to requests for comment.

Uniper’s spokesperson stated that they do not have such information at the moment when Nord Stream 2 AG asked for it.

Gazprom did not disclose whether all entities connected to Nord Stream 2 AG will be closed down, or how Gazprom intends to continue with maintenance.

Guy Parmelin, the Swiss Economy Minister, stated Monday in an interview to Swiss radio station RTS that Nord Stream employees (more than 140) who were employed in Zug, Switzerland, had been terminated.

Nord Stream 2 AG confirmed Tuesday’s job cuts, saying in a statement that “Due to recent geopolitical developments which led to the imposition US sanctions against Nord Stream 2 AG”, the company had to end contracts with its employees. This is a very regrettable development.

Germany, which imports half its energy from Russia, supported Nord Stream 2 as a way to diversify Europe’s energy sources. But the United States opposed it because of increasing Russia’s dependency on the region and allowing Moscow access to lower volumes via Ukraine. It also has to pay a transit charge.

Several big companies including major oil firms have said that Russia invaded Ukraine last week. Shell said that it won’t be participating in Nord Stream 2 and other investments.