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    Pipes for the construction of the Nord Stream 2 pipeline

    Nord Stream 2: Why Poland's Plan to Gouge Money Out of Gazprom, EU Firms Doomed

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    A Polish watchdog is trying to throw a wrench in the works of the Russian-European Nord Stream 2 project. Sputnik contributor Dmitry Lekukh shed light on the local regulator's capability of upsetting the endeavor run by Gazprom and five leading European energy corporations.

    The Polish Office of Competition and Consumer Protection (UOKiK) kicked off proceedings on May 9 targeting Russia's Gazprom, Germany's Uniper and Wintershall, Switzerland's Engie, British-Dutch Shell and Austria's OMV — the six companies involved in the Nord Stream 2 gas pipeline project to transport Russian gas through the Baltic Sea to Germany's Lubmin.

    Threatening to fine the energy firms 10 percent of their turnover generated in the financial year preceding the year in which the fine is imposed, the Polish regulator claims that the endeavor poses a danger to EU energy security and violates anti-monopoly laws. Earlier, in 2016 UOKiK blocked a joint venture between Gazprom and its five partners.

    "Although the aforementioned European companies did not become shareholders in the pipeline's operator, Nord Stream 2 AG, the Polish antimonopoly body still believes that the granting of direct loans to European corporations by Gazprom within the framework of this project violates the antimonopoly legislation," Sputnik contributor Dmitry Lekukh noted.

    In December 2015, Shell, Engie, Wintershall, Uniper and OMV together with Gazprom submitted the merger clearance application. However, it was the Polish anti-monopoly watchdog that threw sand in the gears of the joint venture, claiming that the deal would further strengthen Gazprom's negotiating position in Poland.

    After the companies had withdrawn their application, UOKiK President Marek Niechcial rushed to announce on August 12, 2016 that the move "means that the joint venture that was to construct the Nord Stream 2 gas pipeline cannot be formed by the six firms," adding that "this will stop the deal."

    In response, the six companies issued a joint statement saying that their decision to withdraw the application "will not affect the continuation by Nord Stream 2 AG of the construction of the Nord Stream 2 pipelines as planned, including its scheduling."

    "All the applicants believe that the project is crucial for the European energy system and each of them will therefore individually contemplate alternative ways to contribute to it," the statement read.

    Lekukh explained that the companies' move was not specifically triggered by UOKiK's opposition to the deal: At that moment, the future of endeavor was hanging in the balance, as the European Commission tried to stop the project by expanding the "third energy package."

    To tackle the challenge posed by the Polish watchdog, the companies agreed that Gazprom would remain Nord Stream 2 AG's only owner, while the five other energy firms would provide it with loans which is seen the Polish regulator as an attempt to circumvent its 2016 ruling.

    "Two years ago, the company that was supposed to construct the Nord Stream 2 gas pipeline was not cleared for this transaction by UOKiK. Unfortunately, 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," Marek Niechcial, the president of UOKiK stated on May 9.

    The fuss instigated by UOKiK over the Nord Stream 2 pipeline looks rather strange, since it neither goes through the territory of Poland nor crosses its territorial waters, Lekukh pointed out. Similarly, the Polish watchdog's attempt to fine Russian and European corporations 10 percent of their turnover looks nothing short of grotesque, he added, noting that Poland's legal system has prompted concerns in the EU.

    In December 2017, the EU decided to start legal proceedings against Warsaw stating that its judicial reforms violate the rule of law in the country. One of Brussels' measures envisages suspending Poland's voting rights in the European Council.

    It is not the first time Poland has tried to upset the Nord Stream 2 project. Earlier, Warsaw policymakers called upon Washington to subject Gazprom and its partners to sanctions under the Countering America's Adversaries Through Sanctions Act (CAATSA). In response, the US government signaled that this option is not off the table. Washington has never concealed its desire to expel Gazprom from Europe's energy market.

    Besides playing into the hands of Washington, Warsaw is apparently seeking to promote its own Baltic Pipe endeavor — a natural gas pipeline between Denmark and Poland. Observers stress that the implementation of Nord Stream 2 will spell the end of the Polish-Danish initiative.

    The journalist underscored that Warsaw risks falling between two stools as it is trying to appease Washington at the same time receiving billions from Brussels and Berlin.

    It appears that Poland is trying to follow in the footsteps of Turkey, which is virtuously playing on US-EU contradictions at the same time as being a NATO member and implementing a series of economic projects with Russia, Lekukh suggested. In contrast, Warsaw has no leverage to force Europe to play to its tune, the journalist noted.

    The views and opinions expressed by Dmitry Lekukh are those of the contributor and do not necessarily reflect those of Sputnik.

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    Tags:
    watchdog, Russian natural gas, punishment, joint venture, Nord Stream 2, OMV AG, Uniper, Shell Oil, ENGIE Company, Wintershall, Gazprom, Germany, Poland, United States, Russia, Netherlands, Austria, Switzerland
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