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Sanctions 'only solution' to block Nord Stream 2 natural gas pipeline: Poland's PGNiG

London — Poland's PGNiG believes sanctions represent the "only solution" to blockthe planned 55 Bcm/year Nord Stream 2 gas pipeline from Russia toGermany, a senior company official said Friday, as the project becomesincreasingly politicized.

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**Ukrainian PM calls on EU, US to help stop new link

**US sanctions law still could be applied to Nord Stream 2

**Poland, Ukraine also attack EU antitrust ruling on Gazprom

PGNiG deputy chief Maciej Wozniak, speaking during a live-streamedmeeting of top European energy officials in Brussels, called on theinternational community to support Polish efforts to derail the project on thegrounds it increases Russian influence over European gas markets.

The controversial pipeline project is opposed by the European Commission,the US and much of Eastern Europe.

But it has the support of five European energy companies -- France'sEngie, Austria's OMV, Shell, and Germany's Uniper and Wintershall -- that arehelping to finance the project, saying it was a commercial project that willhelp meet Europe's growing gas import needs.

"The only solution to stop this pipeline is probably sanctions on it,"Wozniak said.

In August 2017, the US approved a new sanctions law -- the CounteringAmerica's Adversaries Through Sanctions Act (CAATSA) -- which includedmeasures that could be take against companies that invest in Russian energyexport pipelines.

Despite guidance in late October that those sanctions would only beimposed after coordination with allies and that projects that had beenapproved before August 2 would not be affected, recent comments from USofficials suggested sanctions could still be used against Nord Stream 2.

In April, US State Department spokeswoman Heather Nauert said companiesworking in Russian energy export pipeline were engaging in a line of workthat "could subject them to sanctions".

The message was reinforced Friday by Adam Shub, US Ambassador to the EU."We have been very clear that firms working in the Russian pipeline sectorcarry a sanctions risk," Shub said, adding that Washington continued to reviewpossible sanctions action against Nord Stream 2.

POLITICAL RHETORIC

The rhetoric around Nord Stream 2 -- whose construction is alreadyostensibly under way after work began mid-May to dig the trench for thepipelay offshore Germany -- has intensified in recent months.

The mood shifted in particular in mid-April when German Chancellor AngelaMerkel said there were also political considerations around Nord Stream 2 andit was unacceptable for the project to mean Ukraine no longer had "anysignificance" in transiting Russian gas. Ukrainian Prime Minister Volodymyr Groysman said in Brussels Friday thatNord Stream 2 was a "weapon" being used by Russia to exert more influence overthe European gas market.

"I categorically deny that it is a commercial project. It is a newweapon. We should simply stop it," Groysman said.

"There is no need to build new capacity. Russia's aim is to build its owngas transport system and annihilate Ukraine's gas system. Russia wants asingle lever to influence European countries," he said.

"If they build Nord Stream 2 they would immediately start killing anypossibilities for the Ukrainian system [to be used]. We cannot let them doit."

Dominique Ristori, director general of the European Commission energydirectorate, reaffirmed the EU's opposition to the pipeline on the grounds itincreased Europe's dependence on one import route.

"This is not a project that corresponds with our priorities -- namelydiversification of supply," Ristori said. "This project is the opposite."

He said he hoped the EU could come up with some legal parameters tomanage "this very difficult issue".

ANTITRUST VERDICT

PGNiG's Wozniak, meanwhile, slammed the European Commission's decisionThursday in the long-running antitrust case against Gazprom.

The Commission opted not to impose a financial penalty against Gazprom,instead imposing a "tailor-made rulebook" that would require the Russiancompany to change the way it operates in central and eastern Europe.

"Prices will not decrease in central and eastern Europe," he said. "[Thedecision] will not prevent Gazprom from dominating the market. DGCompetition let Gazprom off the hook and accepted a pro-Russia deal."

Companies in the region have lost Eur19 billion ($22 billion) because ofGazprom's pricing policy, he said, adding PGNiG had not imported a singlemolecule of gas over the past two years that was more expensive than the gasit imported from Russia.

"LNG from the US, LNG from Qatargas, LNG from Norway or spot gas from theEuropean market -- all of them were cheaper than Russian gas," he said. --Stuart Elliott, stuart.elliott@spglobal.com

--Edited by Daniel Lalor, newsdesk@spglobal.com