April 6, 2016 / 6:56 PM / 3 years ago

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

* Nord Stream-2 consortium says ‘purely commercial’

* Says would increase liquidity, competition

* Ukraine says would destroy EU solidarity, hike tariffs for some

* European Commission says examining the project closely

By Barbara Lewis

BRUSSELS, April 6 (Reuters) - The Nord Stream-2 project to double the amount of gas shipped directly to Germany from Russia is a Trojan Horse that will lead to tariff hikes and geopolitical blackmail, the CEO of Ukraine’s state oil firm Naftogaz said on Wednesday.

Since its conception last year, Nord Stream-2 has triggered vehement reactions. Many EU governments complain it increases dependency on Russia’s Gazprom, which already supplies around 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 by Russia’s annexation of its Crimea region in 2014, disagrees.

“Some things that look purely commercial, if you look closely, are very much like Trojan Horses. They will create significant issues for the future,” Naftogaz CEO Andriy Kobolev told an audience in the European Parliament.

Those present included Maros Sefcovic, the European Commission’s energy vice president, representatives of Nord Stream and parliamentarians.

Kobolev said Nord Stream-2 would lead to price increases for eastern, central and southern European countries, which would have 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 “geopolitical blackmail,” he said.

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

“As regards security of supply, Nord Stream-2 could lead to decreasing gas transportation corridors,” he said.

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

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

Germany sought in January to reassure Poland the Yamal route was safe.

Its former chancellor Gerhard Schroeder advocated the first direct link to Germany from Russia Nord Stream-1 and chairs the Nord Stream shareholders’ committee.

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

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

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

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