The Biden administration has waived sanctions on the company behind Russia’s Nord Stream 2 gas pipeline to Germany, a move that has angered critics in Washington.

A State Department report sent to Congress concluded that Nord Stream 2 AG and its chief executive, Matthias Warnig, an ally of Russian President Vladimir Putin, engaged in sanctionable activity.

But Anthony Blinken, the US Secretary of State, immediately waived those sanctions, saying that it was in the US national interest.

The decision came as the Biden administration seeks to rebuild ties with Germany, after relations deteriorated under former president Donald Trump.

The waivers have no specific end date, but can be rescinded by the Secretary of State.

The State Department imposed sanctions on four Russian ships, including the Akademik Cherskiy, which began pipe-laying for the project in Danish waters in April. It also imposed the measures on five other Russian entities, including the Russian Marine Rescue Service.

“Today’s actions demonstrate the administration’s commitment to energy security in Europe, consistent with the President’s pledge to rebuild relationships with our allies and partners in Europe,” Mr Blinken said in a release, issued as he met with Russian Foreign Minister Sergei Lavrov in Iceland for an Arctic Council conference.

President Joe Biden, a Democrat, has opposed the $11 billion project that would take Russian gas from the Arctic to Germany, saying it is a bad deal for Europe.

The United States is an exporter of natural gas to Europe in the form of LNG, but Russian gas is cheaper.

Washington fears Russia could use Nord Stream 2 as leverage to weaken European Union states by increasing dependency on Moscow.

Senate Foreign Relations Committee chairman Bob Menendez, a Democrat, criticised the decision, saying it would undermine US efforts “to counter Russian aggression in Europe”.

“I urge the administration to rip off the Band-Aid, lift these waivers and move forward with the congressionally mandated sanctions,” he said.

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Michael McCaul, the senior House Republican on foreign affairs, said: “If the Putin regime is allowed to finish this pipeline, it will be because the Biden administration chose to let it happen.”

However, German officials welcomed the waiver as “a constructive step”.

Heiko Maas, the German Foreign Minister, said: “It’s an expression of the fact that Germany is an important partner for the US, one that it can count on in the future.”

But Yuriy Vitrenko, the chief executive of Ukraine’s state-owned energy company, said Nord Stream was Russia’s most “dangerous geopolitical project”.

Russia’s state energy company, Gazprom, and its Western partners are racing to finish the pipeline to send natural gas under the Baltic Sea. The project, now about 95 per cent complete, would bypass Ukraine, depriving it of lucrative transit fees and potentially undermining its struggle against Russian aggression.

A US official told Reuters that stopping the project would be difficult but that Washington would keep trying. “We inherited a pipeline that was over 90 per cent complete and so stopping it has always been a long shot,” the State Department official said.

At the rate it is being constructed, Nord Stream 2 could be finished before the end of the year.