Page 4 - FSUOGM Week 41

FSUOGM COMMENTARY FSUOGM

Poland, Russia heading for

long-running legal dispute

over Nord Stream 2

Poland's anti-competition authority and Russia's Gazprom could be stuck in

arbitration for years

POLAND POLAND and Russia look set for a lengthy and by its European partners to cover half of Nord
arduous legal dispute, after Polish antimonop- Stream 2’s cost, but UOKiK argues that these
WHAT: oly watchdog UOKiK last week slapped Krem- financing agreements effectively established a
Polish regulator UOKiK lin-run gas supplier Gazprom with a $7.6bn fine joint venture in all but name. The regulator said
has slapped a $7.6bn fine for going ahead with the Nord Stream 2 pipeline it had imposed the maximum penalty it could
on Gazprom for going without its consent. on Gazprom. It has also fined the company’s
ahead with Nord Stream 2 Poland’s efforts will have little bearing on European partners some PLN234mn ($62mn),
without its permission. the controversial project, however, given that representing 10% of the annual turnover of their
UOKiK lacks jurisdiction to halt its construc- subsidiaries involved in Nord Stream 2.
WHY: tion, which is now almost complete. And in any Poland is among the staunchest opponents
Poland, a staunch case, Gazprom has vowed to appeal against the of Nord Stream 2 and Russian influence in
opponent of Nord Stream regulator’s decision, initiating an arbitration Europe. Polish officials argue that Nord Stream
2, says the pipeline will process that could take five or so years to reach 2 will undermine competition in Poland’s gas
have a negative effect on a conclusion. market, and also enable Gazprom to divert gas
its gas market. The crux of UOKiK’s argument is that Gaz- supplies to Europe that currently flow through
prom created a de-facto joint venture with its Poland, robbing Warsaw of billions of dollars
WHAT NEXT: European partners to finance Nord Stream 2. in transit revenues. The project would also
Gazprom has vowed Gazprom’s original plan was to form a consor- increase Europe’s dependence on Gazprom for
to appeal against the tium with Germany's Uniper and Wintershall gas, UOKiK argues.
decision, making a Dea, Royal Dutch Shell, Austria's OMV and “Such a situation may bring about serious
lengthy arbitration case France's Engie to finance, build and operate the consequences for the economy of Poland and of
likely. But the dispute €9.5bn ($11.2bn) pipeline. UOKiK’s approval the EU, in particular by introducing territorial
will have little bearing was needed because of Nord Stream 2’s impact restrictions affecting the delivery of natural gas,
on Nord Stream 2's on the Polish gas market. It withheld this and by increasing the prices of gas to end cus-
completion. approval in 2016, forcing Gazprom to come up tomers, in particular to Polish consumers,” the
with a different plan. regulator said. “The high cost of implementing
Instead, the Russian company was lent funds the undertaking may be offset by higher bills

P4 www. NEWSBASE .com Week 41 14•October•2020