Ukraine challenges Russian gas project

KIEV, Ukraine, Jan. 7 (UPI) -- Ukrainian energy company Naftogaz said it filed an official complaint in Europe, arguing Russian gas pipeline expansion plans would limit competition.

Russian energy company Gazprom in September signed a shareholder agreement on the development of the second phase of the twin Nord Stream pipeline system with his counterparts at German energy companies BASF and E.ON, as well as those from French company ENGIE, Austria's OMV and Royal Dutch Shell.

Under the proposed expansion, two more lines would be added to the existing network running through the Baltic Sea to the German coast, roughly doubling the pipeline's net capacity.

Naftogaz said its complaint against the project was transferred to the European Commission. The company said the project would not align with European measures aimed at distance gas suppliers from transit networks.

"The project would not enhance competition in the relevant gas market, would worsen the security of supply and would be detrimental to the efficient functioning of the Energy Community gas market," it added.

Naftogaz has been under pressure from Gazprom to honor its contractual obligations regarding natural gas sent through Ukraine. Russia meets about a quarter of European gas needs, though most of those reserves head through the Soviet-era pipeline network in Ukraine.

Gazprom said last year the expansion would not meet the regulatory conditions to be considered a new project. The second phase of Nord Stream would be developed by a company named New European Pipeline, and Gazprom would hold a 51 percent share.