Monopoly game: what follows the Polish fine against SP-2 participants

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The participants of the Nord Stream 2 (SP-2) project do not agree with the requirements of the Polish regulator (UOKiK) to pay a $ 61 million fine for not receiving permission from him to jointly implement the project. As Izvestia was told in Uniper, which invests in the gas pipeline, the company intends to appeal the decision of UOKiK… The settlement can take up to five years, and without a final decision on the payment of the fine, there can be no talk. Gazprom, from which they demand $ 7.6 billion, also intends to appeal this decisionbecause he “did not violate the antitrust laws of Poland”. Meanwhile, due to US sanctions, the project has been in limbo for almost a year. Added to this was the situation around Alexei Navalny, because of which opponents of the SP-2 again began to actively call for its stop.

“An unprecedented solution”

On October 7, the Polish Office for the Protection of Competition and Consumers (UOKiK) announced an “unprecedented decision” against the companies involved in the construction of Nord Stream 2: the regulator imposed a fine of 29 billion zlotys ($ 7.6 billion) on Gazprom. and also fined five European companies investing in the project PLN 234 million ($ 61 million)… The amount for each company was 10% of their annual turnover. UOKiK demanded that they terminate the partnership agreement with Gazprom, giving them 30 days.

Back in May 2018, the regulator launched an antitrust investigation. It affected Gazprom and five of its project partners: Engie, OMV, Shell, Wintershall and Uniper. According to UOKiK, the financial deal concluded by Gazprom with these companies without the prior consent of the regulator may lead to restriction of competition. UOKiK’s position prevented these six holdings from creating a joint company to implement the project – as a result, Nord Stream 2 AG is engaged in its construction. It is 100% owned by Gazprom, the other five companies invest half of the project cost in its work.

Earlier, for “refusing to cooperate” in the investigation, UOKiK has already fined Engie and Gazprom, demanding $ 57 million and € 40.3 million, respectively. Now the regulator expects to receive money from all six companies for the fact that they did not receive his consent when entering into a partnership.

– The same entities that, in accordance with the legislation in force in Poland protecting competition, previously requested our consent and did not receive it from us, became parties to financing agreements. At the same time, the level of their financial involvement remained the same, and the financing conditions were determined in such a way as to obtain a share in Nord Stream 2 at a later stage of the project. The interest that accompanies the implementation of the project is also common and common for all participants in the concentration, ”says the head of UOKiK Tomáš Khrustna.

After this news shares of “Gazprom” on the Moscow Stock Exchange fell 1.6%. The company, commenting on the position of UOKiK, expressed its fundamental disagreement with the decision of the Polish regulator and announced its intention to appeal against it.because she “did not violate the antitrust laws of Poland”.

“The decision of UOKiK violates the principles of legality, proportionality and fair trial, and the unprecedented size of the fine indicates a desire to oppose the implementation of the Nord Stream 2 project by any means,” Gazprom said in a statement.

And what about partners?

Izvestia turned to the partners of the Russian holding with a question whether they intend to break the agreement with Gazprom. Four out of five companies provided the answer. As OMV told Izvestia, they received the UOKiK solution and intend to analyze it in detail. “OMV has a clear view that it complies with all applicable laws,” the company said.

Uniper and Shell strongly disagree with the decision of the Polish regulator… As Izvestia was told in the first company, the agreement between the SP-2 investors and Gazprom is not a joint venture, but a financing agreement that is not subject to the Polish merger control law. Based on this Uniper is considering an appeal against the UOKiK ruling – the settlement can take four to five years and no fines will be paid until a final decision is made.

“We are convinced that JV-2 is energetically and economically justified, since Germany and Europe will need more gas in the future and they will have to be supplied with it flexibly and reliably from various sources,” the company said. – That is why we act as a financial partner and continue to build an LNG (liquefied natural gas. – Izvestia) terminal, including for the Atlantic routes. Both are commitments for the coming decades.

Shell noted that it will decide on its steps after examining the solution. As Izvestia was told in the company, as a creditor to SP-2, it conducts its business “in accordance with applicable national and international legislation, including anti-monopoly rules.”

With regard to Wintershall, the company reserves the right to a legal response. “Wintershall Dea is convinced that the Polish antimonopoly regulator in this case is taking an unconventional approach, applying a broad interpretation of the concept of concentration,” the company told Izvestia.

Engie did not provide an operative comment to Izvestia’s request.

Meanwhile, the position of UOKiK was supported by the Polish Foreign Ministry with its statement. As Deputy Minister Pavel Yablonski said, Warsaw did not have any problems with the collection of the previous fine from Gazprom, since it “has the tools” for this. The diplomat did not specify what specific mechanisms are being discussed.

To other obstacles

Meanwhile, the question of whether the SP-2 will still be completed remains relevant from the beginning of 2020. According to the plan, it was supposed to be launched at the end of 2019. However, due to the US sanctions, which are resolutely opposed to this project, the Swiss pipelayer Allseas refused to participate in the construction at the last stage (more than 90% of the pipeline was laid).

Then it was decided to complete the SP-2 by Russian forces: among the most likely replacements for Allseas, the media named the pipelayers “Fortuna” and “Academician Chersky” – in early May they were in the German port of Mukran, where the pipes for the gas pipeline are located. In response, Washington has decided to tighten its stance by threatening sanctions against companies that insure pipelayers. Thus, two Russian ships were also hit.

As a result, both pipelayers seem to have abandoned the project: in August it became known that Mezhregiontruboprovodstroy (MRTS), which leases Fortuna, did not intend to participate in the construction, and in October the media, referring to data from the positioning system of sea vessels, reported that that “Akademik Chersky” headed for Kaliningrad. Who will eventually complete the project is still unknown.

Another problem is the aggravation of relations between Moscow and Berlin due to accusations of allegedly poisoning the Russian blogger Alexei Navalny. Opponents of the project with renewed vigor began to urge to abandon it, and the country’s leadership itself, which until recently defended SP-2, began to evasively answer questions about the fate of the gas pipeline.

At the same time, the Bundestag continues to insist: Germany needs a project. Klaus Ernst, the head of the parliamentary committee on economy and energy, told Izvestia that the United States is most interested in stopping construction, but for Europe it is of great importance. The fact that due to the attack on Alexei Navalny, Europe’s attempts to defend itself from US threats and sanctions have faded into the background, is regrettable, the politician summed up.

Help “Izvestia”

Nord Stream 2 includes two pipelines with a total capacity of 55 billion cubic meters. m annually. It will run from the coast of the Russian Federation to Germany along the bottom of the Baltic Sea, bypassing transit countries (Belarus, Poland and Ukraine) through the exclusive economic zones and territorial waters of five states: Denmark, Russia, Finland, Germany and Sweden.

Nord Stream 2 AG, established in 2015, is responsible for the construction of the project. Its financial investors include French Engie, Austrian OMV, British-Dutch Shell, as well as German Wintershall and Uniper. These five companies have pledged to invest 50% of the project’s cost, which is about € 9.5 billion (€ 950 million from each investor). In December 2019, due to the threat of US sanctions, the construction of the project was suspended.

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