North Sea Gas Pipeline Hits Snag -- WSJ
August 13 2016 - 3:02AM
Dow Jones News
By Sarah Kent, Gabriele Steinhauser and James Marson
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withdrawn in the face of opposition from Warsaw, where the deal was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 .
With Gazprom in the lead, the others said they would find
"alternative ways to contribute."
"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.
Inti Landauro in Paris contributed to this article.
Write to Sarah Kent at sarah.kent@wsj.com, Gabriele Steinhauser
at gabriele.steinhauser@wsj.com and James Marson at
james.marson@wsj.com
(END) Dow Jones Newswires
August 13, 2016 02:47 ET (06:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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