(Bloomberg) — Poland’s antitrust watchdog slapped a $7.6 billion fine on Gazprom PJSC over the Nord Stream 2 pipeline, opening a new front in the bitter political battle over the natural gas project.The record fine adds to pressure against project — nearly complete — that will feed gas from Russia under the Baltic Sea into Germany. Poland and the U.S. have long objected to the pipeline, arguing it will deepen Europe’s dependence on energy supplies from Russia. Germany has taken a more commercial view of the project, leaving Poland frustrated by the EU’s approach.The regulator said the Baltic Sea pipeline impedes competition and “violates the interests of consumers.” It gave Gazprom and its partners 30 days to terminate financing agreements to “restore” competition. The fine amounts to 10% of the revenues of Russia’s primary gas export company, the maximum allowed penalty. Gazprom said it will appeal.“This is serious and bad for the project — it means it might not happen,” said Jonathan Lamb, oil and gas senior analyst at Wood & Company, a Czech investment bank. “Even though Poland is a country whose involvement on the project is tangential, it is fining Gazprom for monopolistic reasons, which will force Russians to come up with remedies.”Gazprom’s shares dropped 0.8% in Moscow. Poland’s Prime Minister Mateusz Morawiecki said last month that his government is stepping up pressure on Germany to halt the project following the poisoning of Russian opposition leader Alexey Navalny. Today’s move may be partly an effort to push Germany and the EU into supporting further sanctions.While the Nord Stream 2 link is outside Polish territorial waters, the government in Warsaw has leverage over Gazprom though its control of separate pipelines, notably the Yamal link carrying gas from giant fields in Siberia. Poland is the only transit country for Yamal gas, feeding about 30 billion cubic meters a year into Germany.“The construction of Nord Stream 2 is a clear violation of market regulations,” Tomasz Chrostny, the head of the UOKiK regulator, said in Warsaw on Wednesday. “This project would not have been created without Gazprom partners from the EU. They should reconsider if they want to be a part of a project that breaches the bloc market rules.”Gas prices for consumers must be “the result of fair competition, and once Nord Stream 2 is operational, it’s likely that gas prices will increase and there’s risk of interruption of supplies.”German Chancellor Angela Merkel has come under increasing pressure to ditch the Nord Stream 2 pipeline, with members of her own party have questioned the project. Cancellation would mean unwinding years of government strategy to turn Germany into a lucrative gas hub. It would also unravel the plans of corporate giants like BASF SE, for which supplies from the link are crucial.U.S. President Donald Trump tightened the screws on Nord Stream 2 and urged Europe to buy more liquefied natural gas from the America. Poland, a staunch U.S. ally in eastern Europe, has welcomed U.S. sanctions against Gazprom. Polish government officials discussed the pipeline when U.S. Secretary of State Mike Pompeo visited Warsaw in August.The move is bound to put another wedge between the EU and Poland, which is already in an unprecedented standoff with the bloc. Poland’s judiciary overhaul has triggered censure from the EU and probes into whether the country of 38 million is adhering to the bloc’s democratic standards.While Gazprom owns the Baltic Sea pipeline project, half of its 9.5 billion-euro ($11.2 billion) cost is being financed by Engie, Royal Dutch Shell Plc, Germany’s Uniper SE, Wintershall AG and Austria’s OMV AG.Gazprom said it will appeal because it “did not violate the antitrust regulations of the Republic of Poland.” That would push any fine back until a court ruled on it, which according to Uniper may take five years. Gazprom views the size of the fine as an indication that Poland “wants by any means to undermine implementation of Nord Stream 2 project.”Work on the link was almost complete when the U.S. imposed sanction last year, forcing a Swiss company laying the pipeline to pull out. Gazprom has said it’s working to complete Nord Stream 2, though it isn’t clear when that can happen.“We are convinced that NS2 has an energy-economic rationale and that Germany and Europe will need more gas in the future and will have to be supplied with it flexibly and reliably,” Uniper said in a statement.The Russian company’s partners in the gas pipeline were also fined 234 million zloty by UOKiK.(Updates throughout and adds Gazprom appeal.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Good morning Data Sheet readers. We’re starting on our new schedule. I’ll write the entire newsletter on Monday, Wednesday, and Friday from now on. Robert Hackett will switch to Tuesday and our West Coast colleague Danielle Abril will take over on Thursday. Enjoy! If you reach page 1,168 of Harlot’s Ghost, the very last page […]
(Bloomberg) — Europe’s top aviation regulator said he’s satisfied that changes to Boeing Co.’s 737 Max have made the plane safe enough to return to the region’s skies before 2020 is out, even as a further upgrade his agency demanded won’t be ready for up to two years.After test flights conducted in September, EASA is […]
The definition says, Entrepreneurs assemble and allocate resources including innovations, finance and business acumen in an effort to transform innovations into economic goods. In the process of understanding what is entrepreneurship, let’s look at why entrepreneurs are important in society. Upon completion of this International Business program, you may be eligible for the Canadian International […]