23rd Oct 2016

Russia to build Nord Stream 2 despite Polish objection

  • Gazprom says it still plans to take delivery of Nord Stream 2 pipes in September, as planned (Photo:

Russian state firm Gazprom has said that it plans to build the Nord Stream 2 gas pipeline to Germany despite the objections of Polish regulators.

"The decision was we shall not wait … the Nord Stream 2 company does exist, it works”, Alexander Medvedev, Gazprom’s deputy CEO, told Russia’s Tass news agency on Saturday (20 August).

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"How the foreign counterparts will participate - this is what they will decide themselves," he added.

"They will be searching for options to join the project. We move forward according to the plan. Our counterparts share our vision."

The statement comes after the Polish anti-trust office, the Urzed Ochrony Konkurencji i Konsumentow (UOKiK), in late July declined to approve the notification in Poland of a joint venture to construct and operate the new pipeline on grounds that Nord Stream 2 would restrict competition in gas supplies.

The pipeline is not intended to run through Poland.

But the UOKiK decision prompted the five EU firms that were to take part in the project and that are active in Poland in other areas to abandon the venture in its current model for fear of Polish fines.

The five firms - Austria’s OMV, French firm Engie, Germany’s Uniper and Wintershall, and Anglo-Dutch firm Shell - said in a statement on 12 August that “each of them will … individually contemplate alternative ways to contribute to it”.

A Wintershall spokesman also told Russian news agency Ria Novosti last Tuesday: “We, along with the other applicants, still support the project … We are now studying alternative ways for its implementation”.

But for his part, the UOKiK president, Marek Niechcial, said on 12 August that the Polish ruling was definitive.

“This will stop the [Nord Stream 2] deal”, he said.

The Polish decision means Gazprom will have to itself find the €8 billion that the pipeline is to cost.

But leading Russian banks are currently hampered from raising capital on international markets due to EU and US sanctions over Russia’s invasion of Ukraine.

Gazprom has also become a less attractive borrower - the firm’s market value has shrunk from over $350 billion in 2008 to some $50 billion due to low energy prices and poor management.

The Nord Stream 2 pipeline was designed to carry 55 billion cubic metres of gas a year and to be operational by 2019.

It would concentrate almost all Russian exports to the EU in one route, making it easier for Russia to cut off clients in eastern Europe and harming Ukraine by bypassing its transit network.

The pipeline also needs to be approved by regulators in Denmark, Finland and Sweden because it is to pass through their maritime zones.

Meanwhile, the European Commission has indicated that both its offshore and onshore parts would be subject to EU energy laws.

The EU’s so called third energy package says that firms cannot majority-own supply and distribution assets and must give competitors access to their pipelines.

The laws already saw Gazprom abandon an earlier project, South Stream, designed to bypass Ukraine by shipping gas to Bulgaria.


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