BERLIN (Reuters) – The U.S. ambassador to Germany has warned companies involved in the construction of the Russian-led Nord Stream 2 gas pipeline that they could face sanctions if they stick to the project, a senior U.S. official said on Sunday.

U.S. President Donald Trump has accused Germany of being a “captive” of Moscow due to its reliance on Russian energy and urged it to halt work on the $11 billion gas pipeline.

The pipeline, which would carry gas straight to Germany under the Baltic Sea, is driving a wedge between Germany and its allies as it would deprive Ukraine of the lucrative gas transit fees it currently enjoys.

U.S. Ambassador Richard Grenell addressed the issue in a letter sent to several companies, the U.S. Embassy said.

“The letter reminds that any company operating in the Russian energy export pipeline sector is in danger under CAATSA of U.S. sanctions,” the spokesman said, adding that other European states also opposed the planned pipeline.

Germany and other European allies accuse Washington of using its Countering America’s Adversaries Through Sanctions Act (CAATSA) to meddle in other counties’ foreign and energy policies due to its extraterritorial effect.

There was no immediate reaction to Grenell’s remarks from the German government and firms participating in Nord Stream 2.

Germany and Russia have been at odds since Moscow annexed Crimea from Ukraine in 2014. But they have a common interest in the Nord Stream 2 project, which is expected to double the capacity of the existing Nord Stream 1 route.

German newspaper Bild am Sonntag, which was first to report on the letter, said that Grenell was trying to blackmail German companies with the letter.

The U.S. Embassy denied the accusation. “The only thing that could be considered blackmail in this situation would be the Kremlin having leverage over future gas supplies,” the embassy spokesman said.

The letter was coordinated in Washington by several U.S. government agencies and is not meant to be a threat but a clear message of U.S. policy, the spokesman added.

Russian gas giant Gazprom (GAZP.MM) is implementing the project jointly with its Western partners – Uniper (UN01.DE), Wintershall (BASFn.DE), Engie (ENGIE.PA), Austria’s OMV (OMVV.VI) and Anglo-Dutch group Shell (RDSa.AS).

German Foreign Minister Heiko Maas said on Thursday that any U.S. sanctions against Nord Stream 2 would be the wrong way to solve the dispute and that questions of European energy policy had to be decided in Europe, not in the United States. [nL8N1ZA63B]