Poland used the last argument to stop “Nord Stream – 2”. The country’s anti-monopoly regulator fined Gazprom and five European companies for bypassing the ban on setting up a joint venture and starting building a gas pipeline. Perhaps, the main thing is instructing the Russian monopoly’s partners to leave the project within 30 days. The majority of European and Russian experts believe that Warsaw has little chance to stop the gas pipeline construction: the original decision of the Polish regulator has no grounds, European companies are too deeply involved in the project and Polish fines will be challenged in courts, the proceedings in which may take years.
Opponents of “Nord Stream – 2” jubilantly accepted the decision of the Polish UOKiK to fine “Gazprom” for $ 7.5 billion. At the same time, European companies were issued a fine totaling only $ 60 million and ordered to leave the project within 30 days, breaking the financing agreements.
“The headlines are focused on a record fine for Gazprom. More important, however, is the instruction to European companies to stop financing Nord Stream-2,” said Alan Riley, a senior research fellow at the American Atlantic Council and lawyer.
In his opinion, Poland has given Shell, Engie, OMV, Wintershall, and Uniper a legitimate reason to withdraw from the project: “Most likely, there are no penalties in contracts if the companies are instructed to terminate them”. Alan Riley believes that if the partners leave, Gazprom will have a huge gap in financing the project.
Nikos Tsafos, a leading analyst at the Center for Strategic and International Studies (CSIS), notes that if the money is already invested in the project, it will have to be written off: “And what is the benefit of European companies then?
“With the demand to leave the project everything is complicated. It is almost impossible to do it,” says Alexey Kalachev, an analyst of FINAM Group. – All investments have already taken place, the project is almost completed and the gas pipeline is almost complete. How can everything be returned to its original position? Unless you formally write off the already invested funds as a loss. Thus, they have already been invested more than the number of penalties imposed on Gazprom’s European partners.
Leading analyst FNEB and an expert of the Financial University under the Russian government Igor Yushkov adds that each of the five European companies has invested in the “Nord Stream – 2” almost 1 billion euros each: “Companies have issued loans to Gazprom for this amount. Therefore, a fine of several tens of millions of dollars does not scare them. If they leave the project, they will lose much more money”.
Senior Group Director for Natural Resources and Commodities of Fitch Rating Agency Dmitry Marinchenko told RIA Novosti that the prospect of the Polish regulator to collect fines and achieve the cancellation of contracts is questionable.
“I believe that the European participants of the SP-2 project will not agree with the UOKiK requirement and will certainly challenge this decision. Naturally, neither will Gazprom. Chances to challenge, I think, there are, if not limited to the court in Warsaw, and go to the European courts,” – said analyst GC “FINAM” Alexei Kalachev. In 2016, UOKiK did not agree on the creation of a consortium for the construction of “Nord Stream – 2” and the participants changed the scheme of financing the project from equity to credit. “That is, they did not become co-owners of Nord Stream 2 AG, the only participant of which was Gazprom, but switched to the credit scheme of financing. Polish regulator believes that this does not change the case, that this is a hidden form of participation all in the same consortium, but already implemented without the approval of him. In fact, this is probably the case, but formally it is not at all obvious, and it is theoretically possible to challenge this statement in court. Unless, of course, the court is biased,” the expert believes.
Igor Yushkov, a leading analyst of FNEB and an expert of the Financial University under the Russian government, is sure that the antimonopoly authority of Poland clearly exceeds its authority, as it is not engaged in the development of competition in their country, but acts as an instrument of sanctions in international relations. Therefore, the chances of Gazprom and its partners are good.
The original decision of the Polish regulator in itself is controversial and groundless, says Laurent Rusetskas, executive director of the British risk analysis agency IHS Markit. He points out that UOKiK talked about the negative impact of the consortium on competition on the Polish gas market, but never made any official decisions.
“I would like to point out that the regulator did not have any argument that Nord Stream 2 itself has a negative impact on the Polish gas market. It was a merger, as only this can be considered for UOKiK. In such a case, how can the different ownership structures of Nord Stream 2 affect the competition on the Polish market? It can’t. This case has always been an attempt to achieve a concrete result regardless of the facts and scope of the anti-trust legislation,” Laurent Rusetskas wrote on Twitter.
In confirmation of this, one of Gazprom’s European partners has already stated that the legislation in Warsaw is too freely interpreted. “Wintershall Dea is convinced that the Polish antitrust regulator, in this case, applies an unconventional approach, applying a broad interpretation of the concept of concentration”, – said the press service of the German company.
Tom Majec-Manser, an analyst of the ICIS international platform, noted that if the Polish competition authority is so concerned about the competition on the gas market and better consumer prices, why it does not look at the current state of the Polish gas market itself. “Could anti-Russian political sentiment be the reason for the whole play?? Nah, a stupid idea…” – The expert wrote ironically in the social network.
The ICIS analyst did not accidentally speak about the situation on the Polish gas market. Traders of imported pipeline gas demand that the Polish authorities give them the same rights as LNG importers. The point is that from October 2023 they will be released from the obligation to create gas reserves in Poland’s storage facility. The European Federation of Energy Traders (EFET), whose members are more than 130 international companies, said that all the capacities of the only LNG terminal were booked by the state company PGNiG and thus, it will benefit from the decision of the Polish authorities and there will be no increased competition on the Polish market. Moreover, the state company owns almost all the storage facilities and has set high tariffs for traders.
As noted by the Montel newspaper, the obligation to have gas reserves in the storage facility for traders who import less than 100 million cubic meters of gas per year was set in Poland in 2016. And after that, according to the ERO regulator, many companies left the Polish market. In November last year, the European Commission said that Polish obligations for traders violate EU law and have already caused distortion of the market.
“When Poland announced the introduction of obligations, the government referred to the security of supply because of dependence on Russian gas, but the long-term contract with Gazprom ends in 2022, so why the obligations remain? – one of the traders told Montel.