Europe Energy Firms to Finance Up To €4.75 Billion for Gazprom Nord Stream 2 Gas Pipeline

By Emre Peker

BRUSSELS--European energy firms pledged Monday to pay for half the cost of a natural-gas link from Russia to Germany, lending significant support to a controversial pipeline that is fueling tensions within the European Union.

A consortium of five companies--Engie, OMV, Royal Dutch Shell PLC, Uniper and Wintershall Holding GmBH--said they would provide up to €4.75 billion ($5.1 billion) in long-term financing to Nord Stream 2 AG, a wholly owned subsidiary of Russia's state-owned Gazprom. Each European firm would fund up to €950 million.

The pipeline, which would double the capacity of the existing Nord Stream link by adding another 55 billion cubic meters of annual volume, faces stiff resistance from Central and Eastern European members of the EU.

Previously, Polish competition authorities blocked the five European companies from becoming Nord Stream 2 shareholders.

"The financial commitment by the European companies underscores the Nord Stream 2 project's strategic importance for the European gas market," Gazprom and its European backers in Nord Stream 2 said in a joint statement. The pipeline, which is scheduled to be completed by the end of 2019, will contribute to competitiveness and long-term energy security in the EU, they said.

Gazprom's planned expansion would enable Russia to cut back on eastern routes through Ukraine and Belarus, critics say. That would threaten the EU's energy security, while also undermining a key diplomatic objective for Brussels: supporting Kiev amid its conflict with Moscow.

Write to Emre Peker at [e-mail]

(END) Dow Jones Newswires

April 24, 2017 10:21 ET (14:21 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.