Thursday, October 29, 2020

Poland: another blow against Nord Stream 2

The polish office for competition and consumer protection (UOKiK) has inflicted financial penalties of more than 6 bn EUR on Gazprom and other companies involved in the pipeline construction; polish government hopes that to end the controversed project, writes german newspaper Süddeutsche Zeitung (SZ):

After the attempted murder of Kremlin critic Alexej Nawalny and a decision by its anti-monopoly authorities, Poland is hoping for an end to the controversial Baltic Sea pipeline Nord Stream 2. A construction freeze is apparently possible, said Poland's Foreign Minister Zbigniew Rau on Polish radio. Norbert Röttgen, Chairman of the Foreign Affairs Committee in the Bundestag, had previously also called for an immediate construction stop.

Poland has long been campaigning for a complete shutdown of Nord Stream 2, the 93 percent completion of which is being financed by Russia's gas monopoly Gazprom, the German companies Wintershall and Uniper, the Austrian OMV, the French Engie and the British-Dutch Shell. After the assassination attempt on Navalny with a neurotoxin by the Novichok group, "a key moment has come when we should all say that it makes no sense to pursue a project like Nord Stream 2 with Russia," said Poland's Prime Minister Mateusz Morawiecki to the EU Summit last week for an end to the Baltic Sea pipeline.

In addition to the political rejection by Warsaw, there are now possible billions in fines for Gazprom and millions in fines for its western partners - and probably years of disputes before Warsaw and European courts. On October 6, Poland's anti-monopoly authority UOKiK imposed a fine of almost 6.48 billion euros on Gazprom for alleged violations of Poland's anti-monopoly laws. Engie is to pay 12.4 million euros, Uniper 6.67 million, Wintershall 6.87 million, Shell 6.74 million and OMV 19.6 million. Gazprom and several partners have already announced lawsuits against the decision - it can take years to reach a decision.

The background to the UOKiK decision is a request from Gazprom and the five western partners in 2015: At that time, the companies asked Poland's anti-monopoly authority for approval of a planned joint venture for Nord Stream 2, in which Gazprom will hold half and the five western companies each hold ten percent should hold. According to UOKiK, Gazprom and its partners have recognized Polish jurisdiction and EU law.

But in 2016 the then UOKiK boss announced concerns about the planned joint venture: Nord Stream 2 would reduce competition on the gas market and increase Europe's dependence on Russian natural gas. As a result, the Russian monopoly and its partners withdrew the application in Warsaw in August 2016 - and in 2017 only signed two contracts for the joint financing of Nord Stream 2. However, according to today's UOKiK boss Tomasz Chróstny, these contracts constitute a de facto joint venture without If it had only been a question of financing, Gazprom could have borrowed the billions required for the construction of Nord Stream 2 (total cost: estimated 9.5 billion euros) from banks or the Russian government. The penalties now imposed, each corresponding to a tenth of the annual turnover, are the maximum possible penalty under Polish law. In addition, the companies should terminate their agreements within 30 days.

Gazprom said the Warsaw decision "violates the principles of legality, proportionality and fair trial" and announced a lawsuit; Shell did the same. The Warsaw Anti-Monopoly Court is initially responsible. Should Gazprom and its partners lose there and in an appeal, they should go to the EU Court of Justice. Kremlin spokesman Dmitrij Peskow said of the Warsaw decision that Russian-Polish relations were "not flourishing" anyway. One could therefore not assume that anything would have a negative effect on them.

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