„The Nord Stream 2 project is slowing down and may be at least delayed. This is caused by the increasing risk related to supporting this controversial endeavor, which is upping costs for its European promoters. However, Russians introduced a red herring – fictional problems with Qatari LNG,” writes Wojciech Jakóbik, editor in chief of BiznesAlert.pl.
BiznesAlert.pl reported that companies, which were forbidden by the Office of Competition and Consumer Protection to establish a consortium, agreed on the terms of credit arrangements to construct the pipeline. The consortium responsible still belongs entirely to Gazprom.
„The agreement on deficit financing regulates obligations to provide credit to Nord Stream 2 AG in the event that no or insufficient project financing (up to 70% of total expenditures on the project or up to 6.65 billion euros) is raised,” announced Gazprom. This means the creditors are anticipating problems with securing the financing of Nord Stream 2 by the Russian investor.
The European partners: OMV, ENGIE, E.on/Uniper and BASF/Wintershall, decided on a high interest loan. According to EURIBOR, the credit will be at a rate of 5.75% to 6.75% per annum, depending on the actual scale of financing. Every company will contribute around EUR 950 million to the project, whose total cost is estimated at EUR 9.5 billion, which finances around 50% of the pipe in total.
Such a high interest rate reflects the increasing political risk posed by the project. This is caused mostly by the fact that the European Commission, pressured by critics of the undertaking from Central and Eastern Europe and, most of all, by a letter from Denmark and Sweden, decided to ask for a negotiation mandate from Member States to negotiate with Russia the terms of subjecting the project to the EU law.
The Nord Stream 2 consortium does not want this to happen, because it would at least delay the project, which was supposed to be ready in 2019. Either way, according to Olena Pawlenko from the consulting company Dixi Group, the project is already running late and Gazprom may not be ready to replace the gas transit via Ukraine with Nord Stream 2 in accordance with its original plan, i.e. the moment when the transit agreement with Ukraine will end in 2019. „The construction of Nord Stream 2 was supposed to start a long time ago, the pipe is not under construction, which means it will be impossible to open it on the original deadline,” she said during the 2nd Polish-Ukrainian Gas Conference under the auspices of our portal.
Poland will demand from the European Commission to fully subject the entire Nord Stream 2 pipeline to the EU law. On 6 June Warsaw adopted a position on the project, which was classified probably because it included instructions for the EC’s negotiation mandate. The EC-Russia talks may take a long time, which is making Gazprom nervous. On 13 June public consultations about the project will take place in the Polish town of Szczecin. After the environmental organizations – ClientEarth and Greenpeace unequivocally criticized the project, it is to be expected that its opponents will engage heavily in the process. It was a difficult Tuesday for Nord Stream 2 supporters.
However, the Polish media had to handle a different topic. The red herring that was introduced to undermine the credibility of LNG supply from Qatar to Poland, turned out to have been entirely made up in Russia. Unfortunately, some Polish MPs decided to score some political points out of it.
According to CNN, it was Russian special forces who were responsible for destroying Qatar’s relations with other Middle Eastern states. The FBI said that the false information about the statements made by the Qatari head of state about the authorities in Riyadh, were planted by Russian hackers. The cyber-attacks caused a diplomatic crisis between Qatar and Saudi Arabia, which led to a transport blockade of Qatar by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt. The Russian fake news was supposed to cause a conflict between US allies in the Middle East, in order to weaken the coalition that threatens Russian interests in Syria.
The red herring was picked up by Russia’s Gazprom. The company commented on the blockade by speculating that it may impede LNG supplies to Europe. „Qatar does not export oil, it exports gas. We cannot exclude that an escalation of the events may cause problems with Qatari LNG exports. I don’t know if this is going to happen,” said Alexander Medvedev, Deputy Chairman of Gazprom’s board. Speculations on this issue were also made in the Polish lower chamber of the Parliament – the Sejm, on which BiznesAlert.pl reported.
Nevertheless, the LNG transports from Qatar are not under threat, which I have already explained in detail on our portal. At the same time, on 8 June, the Lech Kaczyński LNG Terminal will be celebrating its first ever LNG transport from the USA. Russian officials and media have been consistently claiming that such purchases were impossible in Central and Eastern Europe. However, today they are becoming a fact and Russian fake news, like the Qatari one, will not change that. They will also not change the fact that the Russian Nord Stream 2 project is facing an increasing opposition.