Gazprom Throws its Weight in Polish Joint Venture

Today the Associated Press is reporting that Gazprom has partially suspended cooperation with the Polish pipeline company Polskie Gornictwo Naftowe & Gazownictwo (PGNiG), which manages a major segment of the Yamal pipeline transporting Russian gas to Western Europe. According to the reports, the Polish are claiming that Gazprom suspended cooperation after their “unfounded” requests for lower transit fees were rejected. But according to a company press release, it appears that PGNiG and Gazprom are really fighting over the control of their joint venture EuRoPol:

On request of Mr A. Medvedev, a representative of Gazprom, the Supervisory Board has changed its modus operandi. Accordingly, technical issues will be discussed by correspondence. Moreover, decisions in this regard will be taken in the same manner. At the same time, in accordance with the declaration of the Russian party, it will be ready to resume normal work of the Supervisory Board only once the other shareholders have accepted increased influence of Gazprom on the decision-making in the Company. In effect, the attitude of the Russian representatives in the Supervisory Board of EuRoPol Gaz SA leads to a deadlock in the mutual relations between the shareholders and paralysing the work of the Supervisory Board.

The Polish pipeline operator has not elaborated on what the real impact of this impasse would be, and Gazprom has yet to comment. It seems unusual that Gazprom would assume that PGNiG should resign itself to a secondary, non-executive role when both companies own 48% of the joint venture – but then again the Kremlin has a track record of misunderstanding the basic rules of corporate governance. What is certain is that the Yamal dispute, like the Belarus oil cut off, will not help Russia’s attempts to build a reputation as a reliable partner – even if they are spending $11 million on this new image. Poland’s rocky relations with Russia are not restricted to the energy sphere – and the Yamal disagreement may be partially shaped by a larger trade dispute involving a Russian ban on Polish meat imports (the two countries have even accused each other of forging documents).