Poland Fines Gazprom €50M Over Nord Stream 2 Pipeline

Poland Fines Gazprom €50m Over Nord Stream 2 Pipeline

Reprinted from the FT – 04/07/2020

Warsaw’s anti-monopoly watchdog says Russia’s state-controlled gas giant failed to co-operate with its investigation The Nord Stream 2 pipeline will double Gazprom’s capacity to ferry gas directly from Russia to Germany, without routing it through central Poland has fined Russia’s state-controlled gas giant Gazprom 213m zloty (€50m) for its lack of co-operation with an investigation by Warsaw’s anti-monopoly watchdog into the Nord Stream 2 pipeline.

The pipeline will double Gazprom’s capacity to ferry gas directly from Russia to Germany, without routing it through central Europe, which Poland and several other states in the region fear could undermine their energy security.

In 2018, Poland’s anti-monopoly watchdog, UOKiK launched a probe under competition rules against Gazprom and the five western companies — Engie, Uniper, OMV, Shell, and Wintershall — that are co-financing the project on suspicion that they were going ahead without Warsaw’s approval.

Under EU rules, companies involved in a transaction that has an impact on a particular market are obliged to report the transaction to the national antitrust authority and respond to its requests. However, UOKiK said on Monday that Gazprom had refused to respond to its requests for documents relating to Nord Stream 2, and this was the reason for the fine.

“In my opinion, this was an intentional action which was meant to hinder the proceedings we are carrying out. In connection with this, I decided to impose on Gazprom a fine of almost 213m zloty,” Tomasz Chrostny, head of UOKiK said, adding that this was the maximum fine UOKiK could levy. “Gazprom’s attitude has undoubtedly made our proceedings more difficult, but the Russian company hasn’t been able block them. We have enough evidence and are concluding our analysis.”

The Kremlin-controlled gas company responded by saying that the information request was invalid and that it would not pay the fine pending a potential appeal.

“The information requested by the Polish Antimonopoly Office had nothing to do with the subject of the anti-monopoly investigation,” Gazprom said in a statement to Russian newswire Interfax.

It added that it would “take measures to protect its interests, including appealing the decision in court, where UOKiK will need to prove the viability of its position. In case of a court appeal, the fine will not be subject to collection until the relevant court decisions.”

UOKiK’s decision is the latest in a series of Polish moves against Nord Stream 2 and follows the imposition last year of a 172m zloty fine on Engie, also for failing to co-operate with the watchdog.

The project has also drawn fierce criticism from the administration of US President Donald Trump. Secretary of state Mike Pompeo said last month that the US would toughen its sanctions regime for companies helping Russia complete the pipeline. Twice weekly newsletter Energy is the world’s indispensable business and Energy Source is its newsletter. Every Tuesday and Thursday, direct to your inbox, Energy Source brings you essential news, forward-thinking analysis, and insider intelligence.

The latest move by Washington means that any group helping finish the project, such as companies that fuel the Russian vessels laying the pipeline, or banks that transfer funds on behalf of any of the entities involved, could be exposing themselves to US sanctions.

Despite the mounting pressure, the pipeline is edging closer to completion, with only 160km of underwater infrastructure left to connect it to the receiving station in northern Germany.

Last month, Denmark’s energy agency gave Gazprom permission to resume work on the pipeline, the last stretch of which lies within Danish waters. Analysts estimate that the final section could be laid in about 3 months.