All news

Poland's fines for Nord Stream 2 will affect neither project nor partners, analysts say

In May 2018, Poland’s Office of Competition and Consumer Protection (UOKiK) initiated an investigation into Gazprom and five of its financial partners in Nord Stream 2 - OMV, Wintershall, Shell, Uniper and Engie

MOSCOW, October 7. /TASS/. The decision of the Polish antimonopoly regulator to impose fines on Gazprom and its financial partners for the construction of the Nord Stream 2 gas pipeline will not have a significant impact on the companies and the project's implementation, since most of the funding has already been completed. Moreover, Warsaw has little chance of confirming the legality of its claims in international courts. This is according to the analysts interviewed by TASS.

"The legal and practical ability of the regulator to levy this fine and annul the agreement is questionable. There will most likely be no consequences for Gazprom and Nord Stream 2," says Dmitry Marinchenko, head of the group for natural resources and commodities of the Fitch international rating agency.

The expert also assumed that the reason behind the decision of Poland is that it fears of a possible decrease in gas transit through its territory after the commissioning of Nord Stream 2. However, the possible losses are not comparable to the amount of the fine, the expert noted.

Finam analyst Aleksey Kalachev agrees with this point of view:

"The claims of the Polish antitrust regulator are formally aimed not at the project itself, but at the order of its financing. Everything has already happened in this respect, investments have been made, no fine will reverse this situation," he says.

Aleksey Grivach, deputy head of the National Energy Security Fund, also doubts that the project's creditors "will submit to Poland's illegal actions."

"Poland has long been engaged in political and legal trolling of Russia-Europe gas cooperation in the interests of the United States. This policy will do no good to Warsaw," the expert believes.

In May 2018, Poland’s Office of Competition and Consumer Protection (UOKiK) initiated an investigation into Gazprom and five of its financial partners in Nord Stream 2 - OMV, Wintershall, Shell, Uniper and Engie.

UOKiK imposed a penalty of around $57 mln on Russia’s top gas producer Gazprom for its failure to provide UOKiK with information about contracts concluded by Nord Stream 2 AG with European companies financing the Nord Stream 2 gas pipeline project. Later, Gazprom filed an appeal against this penalty.

Earlier on Wednesday, UOKiK presented the results of the investigation. The regulator decided to fine Gazprom and five companies cooperating with it. President of UOKiK Tomasz Chrostny said at a press conference, a total fine of 234 million zlotys ($61 million) was imposed on the five partners, and Gazprom was fined 29 billion zlotys ($7.6 billion). Chrostny noted that this is the largest antimonopoly fine in the history of the regulator, it is equal to 10% of the annual turnover of each of the companies.

Also UOKiK requires European companies to terminate the partnership agreement within 30 days after receiving the decision. The companies can challenge this decision. The court of appeal in this case is the court in Warsaw.

Austria’s OMV (faces a $22.9 mln fine) and Shell (faces a $7.9 mln fine) announced that that they received the Polish regulator's decision and intend to carefully study it for further steps. OMV and Shell are confident that they will comply with all laws that apply to the project.

Gazprom said that it totally disagrees with the position of the Polish watchdog and the penalty. The company stresses that in fact the project was implemented not by a joint venture, but by a subsidiary of Gazprom with the attraction of debt financing.

Germany’s Uniper (faces a $7.8 million fine) also announced that it may challenge Warsaw's decision. According to the company’s estimates, the settlement of the issue may take up to 4-5 years.

About project

The Nord Stream 2 pipeline is set to run from the Russian coast along the Baltic Sea bed to the German shore through the exclusive economic zones and territorial waters of five countries - Russia, Finland, Sweden, Denmark, and Germany, thus bypassing transit countries of Ukraine, Belarus, Poland and other Eastern European and Baltic states. Each of the pipeline’s two stretches will have a capacity of 27.5 bln cubic meters. Gazprom's European partners in the project are Germany’s Wintershall and Uniper, Austria’s OMV, France’s Engie and the British-Dutch Shell.