Nord Stream 2: planned JV for Russia-Germany gas pipeline falters

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An application with Poland’s competition authority to form a joint venture to build a pipeline called Nord Stream 2 was withdrawn in the face of opposition from Warsaw, where the deal was seen as giving Russia greater sway over Polish energy supplies.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 and Germany’s Wintershall provided.

Poland hailed the decision. “This will stop the deal,” Marek Niechial, president of Poland’s antitrust authority, said on ­Friday. But in a joint statement, the consortium of Gazprom, Shell, Wintershall, French utility Engie, Austria’s OMV, and a unit of German utility E. ON 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, which is wholly owned by Gazprom. “We are still working and we are on track.”

A Shell spokesman said “the project was very important” and the company was “considering other ways we can contribute.”

OMV, E. ON and Engie were unavailable for comment. Wintershall and Gazprom couldn’t immediately be reached.

The decision is the latest stumbling block for an $US11 billion ($14bn) project that has inflamed 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 US 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 metres 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 opposed the project. The US fears such a pipeline could 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.