Polish antimonopoly authority fines Nord Stream 2 gas pipe investors €6.5bn

LONDON (ICIS)–The Polish antimonopoly authority (UOKiK) fined the investors of the Nord Stream 2 pipeline a total of Polish Zloty 29.3bn (€6.5bn) for implementing the project without UOKiK’s required consent, the authority announced on Wednesday.

In April 2017, the investors – Russia’s Gazprom, France’s Engie, Germany’s Wintershall and Uniper, Austria’s OMV and international conglomerate Shell – agreed to co-finance the €9.5bn offshore project, with Gazprom responsible for €4.75bn and the other five investors contributing €950m each in loans to Nord Stream 2 AG, a Gazprom subsidiary. Gazprom is the sole stakeholder in the project.

Nord Stream 2 will double Russia’s direct pipeline export capacity to the EU to 110 billion cubic meters (bcm)/year. This is roughly half the volume Gazprom plans to keep sending to Europe – its main export market – until 2030. The EU gets around 35% of its gas supplies from Russia.

“By establishing a pledge on the stocks of Nord Stream 2, the financing parties became “quasi” stockholders of that company – in the event of its default under the loan agreement, they would be entitled to take over the stocks of the company constructing the gas pipeline,” UOKiK said when announcing its fine.

This breach of fair competition rules may bring serious consequences for the Polish and EU economies, in particular by introducing territorial restrictions affecting deliveries of gas, and by increasing gas prices to end customers, in particular to Polish consumers, UOKiK also said.

The authority gave the investors 30 days after they received the fine to terminate their financing agreements.

Completion of this project increases economic dependence on Russian gas – not only in the case of Poland, but also of other European states, UOKiK president Tomasz Chrostny said.

Poland will not renew its supply contract with Russia expiring at the end of December 2022, Polish energy minister Piotr Naimski announced last year.

The country has pushed for supply diversification and managed to replace Russian pipeline supplies with long-term US LNG contracts from early 2023, Norwegian piped gas via the planned 10bcm Baltic Pipe in late 2022, as well as some Qatar LNG deals and domestic production. But whether this strategy is sustainable remains to be seen.

On Wednesday, Gazprom announced it “will certainly use its right to appeal the decision.”

UOKiK had initially fined Gazprom €48mn in August and Engie €39mn in 2019 as part of the same investigation but decided to impose “maximum penalty” on Tuesday.

BOXOUT

UOKiK FINES

Gazprom: €6.48bn

OMV: €19.6mn

Engie: €12.4mn

Wintershall: €6.87mn

Shell: €6.74mn

Uniper: €6.67mn