Nord Stream 2 Gas Pipe Partners Rapped by Polish Regulator

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(Bloomberg) -- Poland’s antitrust watchdog said Russia’s Gazprom PJSC and five companies financing the Nord Stream 2 natural gas pipeline haven’t done enough to make the project comply with Polish law.

Poland opposes the expansion of the major gas link directly from Russia to Germany, Europe’s biggest market for the fuel, arguing it would deepen Europe’s dependence on Russian energy and risk isolating transit nations such as Ukraine. Gazprom in 2016 ended a shareholder agreement with Royal Dutch Shell Plc, BASF SE’s Wintershall unit, Uniper SE, OMV AG and Engie SA after the Polish regulator blocked the creation of a joint venture, citing concerns it would hamper competition on the nation’s gas market.

The European companies instead offered loans to the project, a change that “could be an obvious attempt to circumvent the lack of consent to establish a company financing the construction of the gas pipeline,” the regulator said.

“Our aim is not to block the project but to make sure the law is being obeyed, but at the same time the project could be delayed,” Marek Niechchal, the head of the regulator, said in Warsaw. “For us the procedure is a precedent as someone is trying to bypass the previous decision just by repainting it.”

The regulator has said Nord Stream 2, which would double the existing pipeline’s capacity to almost 30 percent of European Union demand when it starts at the end of next year, could hamper competition on the Polish market and strengthen Gazprom’s negotiation position with local fuel buyers. Russia is the country’s biggest source of gas.

The watchdog said it charged the companies at the end of April after obtaining documents from the financing group during a preliminary probe that lasted about a year. They have 21 days to respond. The regulator then needs to review the answers and may decide whether to impose penalties.

If the companies withdraw from financing and Gazprom continues the project alone, the Polish regulator won’t be able to protest, Niechcial said.

“Gazprom is working fully in line with legislation and regulators’ decisions,” the Russian exporter’s spokesman Sergei Kupriyanov said without elaborating on the case.

Engie and Uniper declined to comment, OMV wasn’t immediately able to comment while Shell and Wintershall said they were assessing the letter.

Poland’s government has been separately protesting about the construction of the pipeline in the European Union, saying that it could allow Gazprom to bypass transit routes via Ukraine.

Gazprom Deputy Chief Executive Officer Alexander Medvedev said last month it’s too early to comment on gas transit volumes after its contract with Ukraine expires in 2019. Ukraine said it needs at least 40 billion cubic meters a year to cover network management costs.

©2018 Bloomberg L.P.

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