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Nord Stream-2 gas pipeline is Trojan Horse, says Naftogaz

Wed, 06th Apr 2016 18:53

* Nord Stream-2 consortium says 'purely commercial'

* Says would increase liquidity, competition

* Ukraine says would destroy EU solidarity, hike tariffs forsome

* European Commission says examining the project closely

By Barbara Lewis

BRUSSELS, April 6 (Reuters) - The Nord Stream-2 project todouble the amount of gas shipped directly to Germany from Russiais a Trojan Horse that will lead to tariff hikes andgeopolitical blackmail, the CEO of Ukraine's state oil firmNaftogaz said on Wednesday.

Since its conception last year, Nord Stream-2 has triggeredvehement reactions. Many EU governments complain it increasesdependency on Russia's Gazprom, which already suppliesaround one third of EU gas.

The Nord Stream-2 consortium, which includes Gazprom, E.ON, Wintershall, Shell, OMV and Engie, says the project is purely commercial.

Ukraine, whose relationship with Russia has been soured byRussia's annexation of its Crimea region in 2014, disagrees.

"Some things that look purely commercial, if you lookclosely, are very much like Trojan Horses. They will createsignificant issues for the future," Naftogaz CEO Andriy Kobolevtold an audience in the European Parliament.

Those present included Maros Sefcovic, the EuropeanCommission's energy vice president, representatives of NordStream and parliamentarians.

Kobolev said Nord Stream-2 would lead to price increases foreastern, central and southern European countries, which wouldhave to pay gas hub prices plus transport costs, while Germany,the entry point for Nord Stream-2, would get cheap gas,destroying any EU solidarity.

Russia could offer discounts to those facing high prices,but in exchange for other things, which would be "geopoliticalblackmail," he said.

Sefcovic said the project did not yet conform with EU lawand security of supply criteria.

"As regards security of supply, Nord Stream-2 could lead todecreasing gas transportation corridors," he said.

The routes under threat would include transit throughUkraine, which is the route for around half of the Russian gasthe EU receives and is economically reliant on transit fees.

The Yamal pipeline that supplies Russian gas through Belarusand Poland to Germany is also vulnerable, Sefcovic said.

Germany sought in January to reassure Poland the Yamal routewas safe.

Its former chancellor Gerhard Schroeder advocated the firstdirect link to Germany from Russia Nord Stream-1 and chairs theNord Stream shareholders' committee.

On Tuesday, Schroeder met European Energy and EnvironmentMinister Miguel Arias Canete, who also highlighted concernsabout the future of Ukrainian transit and security of supply,the Commission said following the meeting.

Ulrich Lissek, communications director of the Nord Stream-2consortium, said on Wednesday the gas link could reduce prices,by adding to market liquidity.

Its maximum capacity would be 55 billion cubic metres peryear, which would leave room for other sources, such asliquefied natural gas, he said. (Editing by David Evans)

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