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Nord Stream 2 partners withdraw amid Poland pressure

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Poland – Gazprom says it intends to build a new $11bn gas pipeline from Russia to Germany on its own after a joint venture with five private groups fell apart over pressure from Poland’s anti-monopoly watchdog.

The Russian state-run gas giant said on Friday that the consortium between ENGIE, OMV, Winterhall, Shell, and Uniper had decided to withdraw its application for a Polish joint venture to build the Nord Stream 2 pipeline, reports Max Seddon in Moscow.

Nord Stream 2 AG, a company 100 per cent owned by Gazprom, will carry out the work on its own. “All the applicants believe that the project is crucial for the European energy system and each of them will therefore individually contemplate alternative ways to contribute to it,” Gazprom said in a statement.

The construction, expected to be completed in 2019, will go ahead as planned, the company added. Steel pipes for the first segments are to be delivered in September.

Though the pipeline is not set to go through Poland or Polish waters, Gazprom needed the Polish watchdog’s approval to sell shares in the joint venture to its partners, some of which have assets in Poland. Polish competition law gives the watchdog broad powers to fine the companies if they proceed without its approval. The regulator objected against the pipeline on the grounds that it would cement Gazprom’s already dominant position on the European gas market.

Poland has led a backlash against the pipeline by several eastern EU states who see it as a political measure to increase Europe’s reliance on Russian gas. The pipeline is intended to replace Europe’s dependence on Russian gas through Ukraine, supplies of which Gazprom plans to reduce dramatically after its contract expires in 2019. Ukraine is attempting to wean itself of Russian gas, a longtime source of tension between Moscow and Kiev, since Russia annexed Crimea in 2014.

Article originally published on the Financial Times.