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Saturday, 13 August 2016 09:09

PLAN FOR JOINT VENTURE TO BUILD NORD STREAM 2 FALTERS

Sarah Kent, Gabriele Steinhauser, James Marson, The Wall Street Journal, 12.08.2016  

 

COMPANIES SAY THEY WILL MOVE FORWARD WITH THE GAS PIPELINE SEPARATELY AFTER POLAND OBJECTS  

 

A plan for multiple large European energy companies to team up to build a second natural-gas pipeline from Russia to Germany has collapsed, but the impact on the overall project was unclear.  

 

An application with Poland’s competition authority to form a joint venture to build a pipeline called Nord Stream 2 was withdrawn in the face of opposition from Warsaw, where the deal was seen as giving Russia greater sway over Polish energy supplies.  

 

That leaves Russia’s state-owned PAO Gazprom as the project’s sole operator, potentially robbing it of the political support that big European partners like Royal Dutch Shell PLC and Germany’s Wintershall AG provided.  

 

Poland hailed the decision. “This will stop the deal,” Marek Niechial, the president of Poland’s antitrust authority, said on Friday.  

 

But in a joint statement, the consortium of Gazprom, Shell, Wintershall, French utility Engie SA,Austria’s OMV AG, and a unit of German utility E.ON SE said the decision wouldn’t affect the project, which has had strong backing from German Chancellor Angela Merkel.  

 

“It has no impact,” said Steffen Ebert, a spokesman for Nord Stream 2 AG, which is wholly owned by Gazprom. “We are still working and we are on track.”  

 

A spokesman for Shell said “the project is very important” and the company is now “considering other ways we can contribute.”  

 

OMV, E.ON and Engie didn’t respond to requests for further comment. Wintershall and Gazprom couldn’t immediately be reached.  

 

The decision is the latest stumbling block for an $11 billion project that has inflamed political tensions in Europe, which receives about a third of its gas supplies from Russia but is working to diversify its energy sources.  

 

The European Union and the U.S. have imposed economic sanctions on Russia and some of its companies and government officials over the Ukraine conflict.  

 

Nord Stream 2 would ship an extra 55 billion cubic meters of gas a year to northern Germany through the Baltic Sea, doubling the capacity of the existing Nord Stream pipeline.  

 

Germany has supported the project, saying it is better to work with Russia than to isolate it. But Poland and several other Central and Eastern European states have been vocal in their opposition to the project. The U.S. has also strongly opposed the pipeline, which it fears could further undermine Ukraine’s financial and political stability.  

 

Russia has for years sought to circumvent Ukraine after financial disputes between it and Kiev led to supply cuts to EU countries twice in the last decade.  


Analysts and Western diplomats say Russia doesn’t need to build extra pipeline capacity.  

 

The additional volumes of gas are roughly what Gazprom has been piping to the EU through Ukraine, raising concerns that the new route would allow Russia to strip Kiev of much of its remaining economic leverage and an important source of income.  

 

The EU has in recent years moved to weaken state-controlled Gazprom’s power. The EU opened an antitrust suit against the company and regulators thwarted another pipeline project known as South Stream, while EU countries have built terminals for liquefied-natural-gas deliveries.  

 

But Gazprom has seemed determined to press ahead with its plans. In June the company issued a major tender for the pipeline—a pipe-laying contract worth about $1 billion.  

 

The latest development on Nord Stream comes days after Russia and Turkey signaled they could move ahead with a pipeline project underneath the Black Sea. The development, if completed, would send enough gas to Turkey to make it a new transit hub for energy supplies to Europe.

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