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Polish fine against Gazprom over Nord Stream 2 unlikely to ever be paid

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Poland anti-monopoly watchdog has fined Russian gas giant Gazprom $7.6 billion over the Nord Stream 2 gas pipeline, which is unlikely to ever be paid but causes yet another obstacle for the controversial project from Russia to Germany. But perhaps more importantly Poland also slapped fines on five European investors – Dutch British Shell, Austrian OMV, French Engie and German Uniper and Wintershall –involved in financing the $11 billion project that could double Russia’s gas exports via the Baltic Sea.

“We cannot comment on the decision of the Polish anti-trust regulator regarding the Shareholder and Financial Investors of the Nord Stream 2 Project,” a Nord Stream 2 spokesman told New Europe on October 8. “Nord Stream 2 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,” he added.

On October 7, Polish regulator UOKiK made the decision to impose a fine on the Russian gas holding Gazprom and five European companies cooperating with it and demanded termination of agreements made under the project between the company Nord Stream 2, Gazprom and European investors.

Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies, told New Europe on October 8 she does not expect Poland’s move to fine Gazprom to lead anywhere. “No one is going to terminate Nord Stream 2 financing agreements and the fines will never be paid; one can only guess the logic behind the Polish decision – my view is that this decision is mostly political i.e. to continue showing its opposition to the Nord Stream 2 project to be in the US’s good books, even though Poland is unable to stop the project with this decision it can at least contribute towards generating negative headlines around it,” Yafimava said.

As it is becoming increasingly clear that no German or EU sanctions are likely to be imposed on Nord Stream 2 in connection with the poisoning of Russian opposition leader Alexey Navalny, the Polish decision can be seen as another instrument of keeping the anti-Nord Stream 2 rhetoric alive, Yafimava argued. After the Navalny incident, German Chancellor Angela Merkel is under pressure from members of her own party to abandon Nord Stream 2 but so far Berlin has supported the pipeline that will make Germany a gas hub.

“Most importantly, I think the Polish decision is unjustified from a legal/regulatory point of view and as such is an attempt of misusing law to play politics,” Yafimava argued. “Therefore, I would expect it to be appealed by all companies – Gazprom, which was ordered to pay $7.6 billion, and other five European companies, which were ordered to pay much smaller but not negligible fines. If the Polish court decides to reject these appeals, they would go to the EU Court of Justice and one would expect it to do what is right from a legal point of view, that is to uphold the appeals,” Yafimava said, adding, “This process would take years to complete, and as I said earlier I expect no one will pay anything at the end of it”.

Nord Stream has raised concern about Russia’s dominance of European energy supplies and attracted US sanctions that caused Switzerland-based Allseas to suspend pipelaying activity in December, forcing Gazprom to seek other vessels to complete the final stretch of the pipeline.

UOKiK President Tomasz Chrostny said Poland’s watchdog has imposed the penalty on Gazprom “as a result of the lack of approval for the Nord Stream 2 transaction”. He called on Gazprom and the five European companies to terminate the agreements for financing Nord Stream 2.

In statements posted on the UOKiK website, Chrostny argued that Uniper, Engie, OMV, Shell and Wintershall are customers, and sometimes also competitors of Gazprom on the gas market. “The fact that a joint venture is financed by participants of the gas market and not by financial institution proves that all the entities involved share the same economic interests. Without the participation of those entities, Nord Stream 2 would not be able to operate and to pursue the gas pipeline construction project in the European Union, meaning that most probably it would not be established at all,” the UOKiK President argued, adding, “Completion of the project constitutes a breach of legal provisions and fair competition rules, resulting in increasing the degree of dependence of gas recipients, on the internal market, from a single supplier – Gazprom”.

As expected, Russia called Poland’s decision to fine Gazprom politically motivated. “Obviously, this refers to the next politically motivated attempt of applying pressure to the Russian gas exporter that reliably provided European consumers with natural gas for years and years,” TASS quoted the official spokeswoman of the Russian Foreign Ministry, Maria Zakharova, as telling a briefing on October 8. “We are not surprised at all by Warsaw’s attempts to impede construction of the Nord Stream 2 gas pipeline by means of murky measures, including use of measures obviously not corresponding to the jurisdiction of Poland’s establishments,” Zakharova argued. She claimed that behind the decision to impose the fine “is the intention to materialise, obviously in favour of Washington, the idea of creating an alternative gas hub for resale of the US liquefied natural gas to Eastern European countries”.

 

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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