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Oil report

UPDATE 1-Ukraine Naftogaz says Nord Stream 2 cannot succeed

(Adds Commission comment)

KYIV, Aug 20 (Reuters) - Russia’s Nord Stream 2 gas pipeline is a political project that breaches European Union regulations, cannot work commercially and should be stopped, the head of Ukraine’s state energy firm Naftogaz told Reuters on Friday.

He made the comments ahead of a meeting on Friday between Russian President Vladimir Putin and the German Chancellor Angela Merkel in Moscow, when they were expected to discuss Nord Stream 2, an almost completed link between Russia and Germany that bypasses Ukraine.

Ukraine’s President Volodymyr Zelenskiy is also expected to raise the issue during a visit to the United States later this month, Naftogaz’s Chief Executive Officer Yuriy Vitrenko said, adding the president would press for effective sanctions against the gas link.

“We hope that this gas pipeline will never work as a commercial project,” Vitrenko said in emailed comment to Reuters.

He said he was convinced it did not conform with EU rules, meaning it could not be certified and cannot work as a commercial project.

“We continue to insist that this geopolitical project of the Kremlin must be stopped. In particular, through U.S. sanctions,” Vitrenko said.

The pipeline has stoked tensions between Moscow and Washington, following Russia’s annexation of Crimea in 2014.

U.S. President Joe Biden’s administration, however, has chosen not to try to kill it with U.S. sanctions.

That is a blow for Ukraine, traditionally the major transit country for Russian gas.

Vitrenko said Ukraine needs tens of billions of dollars from gas transit fees to move to a green energy economy in 15 years from now.

A German regional court is expected to decide on Aug. 25 whether EU rules requiring the separation of energy production from transportation and trade must be applied to the Nord Stream 2 gas pipeline.

The companies behind the project, led by Gazprom, have always said it is about gas market economics, not politics, and they have obtained necessary permits.

A spokesperson for the European Commission said in an emailed statement Nord Stream 2 was not a project of common European interest, but the Commission has sought to ensure that, if it were built, it should operate “in a transparent and non-discriminatory way” in line with international and EU energy law.

Reporting by Natalia Zinets; additional reporting by Vera Eckert in Frankfurt and Kate Abnett in Brussels; editing by Barbara Lewis

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