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    Polish Authority Seeks to Legally Block NS2


Poland’s anti-monopoly authority has launched legal action to block Gazprom's Nord Stream 2 project.

by: Mark Smedley

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Polish Authority Seeks to Legally Block NS2

Poland’s anti-monopoly authority has launched legal action to block Gazprom's Nord Stream 2 project (NS2).

The authority, known as UOKiK (or Office of Competition and Consumer Protection), said May 9 it has initiated proceedings against Gazprom, as well as the five gas groups Engie, Uniper OMV, Shell and BASF-owned Wintershall that are helping to finance the NS2 pipeline project. It said the anti-monopoly proceedings were initiated by UOKiK a few days ago.

In August 2016, UOKiK ruled that Gazprom had a dominant position over gas supplies to Poland, and that the NS2 company could further strengthen Gazprom's negotiating power, and so blocked formation of the joint venture company. The five western utilities, all of which were original NS2 partners, formally exited the joint venture. But they agreed to provide financing to Gazprom, now NS2’s sole owner.  

UOKiK’s statement now says it suspects that the parties to the transaction, despite the withdrawal of the notification of concentration, are jointly implementing and financing Nord Stream 2. 

“Two years ago, the company that was supposed to construct the Nord Stream 2 gas pipeline was not cleared for this transaction by UOKiK," the latter's president Marek Niechcial said May 9: "As the preliminary proceedings proved, the entities decided to finance this project despite UOKIK’s objection. This may constitute a violation of anti-monopoly law and that is why we put the allegations to Gazprom and five other entities.” 

In cases where a joint venture goes ahead without prior consent by UOKiK, it may impose a maximum fine of 10% of turnover generated in the financial year preceding the year in which the fine is imposed. Where the joint venture has already been implemented and restoration of competition is otherwise impossible, it can force the disposal of the entirety or a portion of the venture’s assets.

NS2 would add a further 55bn m3/yr capacity to the existing same-sized Nord Stream system, and create the conditions where Gazprom could choose to no longer transit any gas via Ukraine once completed.

A NS2 spokesman told NGW that any remark about the UOKiK action would be one for the six companies involved, but added: "From the project developer's perspective, the project continues as planned. The Nord Stream 2 project is aimed at reinforcing security of gas supply to the EU entire gas market, contributing to creating a more liquid, interconnected and competitive gas market."

Nord Stream 2 could faces challenge from elsewhere

The news comes as Ukraine state-owned supplier Naftogaz must decide whether or not to appeal a ruling against it by the EU General Court, which supported Gazprom over its use of the Opal pipe in Germany (the onshore continuation of the existing Nord Stream pipe). A case mounted by Polish state firm  PGNiG, backed by its government, is pending an appeal before the European Court of Justice.

It also comes as Denmark has yet to decide whether or not to veto NS2 going through its exclusive economic zone (nearshore waters).

Germany too has lately expressed reservations over some Russian statements about halting future gas transits via Ukraine. Last month German Chancellor Angela Merkel said during a news conference with Ukraine's president Petro Poroshenko that NS2 cannot go ahead without clarity on Ukraine’s role as a transit route for gas.

Economy and energy minister Peter Altmaier, who as Merkel's former chief of state is close to her and shares her support for NS2, will be in Kiev on May 13 and Moscow on May 14, according to German business newspaper Handelsblatt and is expected to raise both NS2 and Ukraine's future energy role in his meetings. The newspaper adds that Altmaier's visit will also prepare the ground for a planned summit meeting of Merkel and newly-re-elected Russian president Vladimir Putin on May 18 in Sochi.