Gazprom Bid Feeds David-and-Goliath Anxiety in Danish Parliament

(Bloomberg) -- The biggest party in Denmark's parliament is voicing serious concerns about a bid by Gazprom PJSC to build a pipeline from Russia to Europe that would pass through Nordic and Baltic waters.

Nord Stream 2 would be built by Russian-owned Gazprom and used to funnel the country's gas into Europe. The European Union is looking into a common response to the bid, with security concerns figuring alongside commercial considerations, according to a letter seen by Bloomberg. Danish Foreign Minister Anders Samuelsen says he welcomes the EU's decision to look at the political risks. Others are even more outspoken.

“Nord Stream is owned by Gazprom and in reality Gazprom is the Russian state, and that means that this is Russia versus Denmark,” said Nick Haekkerup, a former defense minister and the foreign policy spokesman for the opposition Social Democrats, the biggest party in the Danish legislature. “Obviously, we're a small player going up against a very, very big player and in that situation it's good to have allies on our side instead of dealing with it on our own.”

EU Skepticism

The European Commission, the EU's executive arm, is trying to persuade member states to let it negotiate on their behalf. It views Gazprom's bid with skepticism on security, energy diversification and political grounds, according to a spokesman. Nord Stream 2 AG said last week that the project complies with EU rules and argues that an “intergovernmental agreement is not a legal prerequisite” for the pipeline to be built.

Denmark won't be able to block the Nord Stream 2 pipeline under international sea treaties and environmental law. But with the EU involved, Denmark would have the allies to stand up to Russia politically, Danish Prime Minister Lars Lokke Rasmussen told parliament in January.

Not all member states affected are worried. Germany and Finland have indicated they will treat Gazprom's bid as a purely commercial proposal. Germany's decision to back Nord Stream 2 is “making the situation difficult for Denmark,” said Mikkel Vedby Rasmussen, a professor of political science at Copenhagen University. The new U.S. administration under President Donald Trump also adds to the complexity, he said.

Sanctions Crack?

“A lot of people are asking how sanctions against Russia will look under Trump,” Rasmussen said. “The question now is whether Nord Stream 2 will be the first crack in the sanctions regime.”

Poland has warned that increasing European reliance on Russian gas is fraught with risk. And outside the EU, Ukraine is keen to curtail Russian influence.

Ukrainian President Petro Poroshenko is due to visit the Danish prime minister in Copenhagen on April 5. Rasmussen, in a statement, underscored Denmark's “refusal to acknowledge Russia's illegal annexation of Crimea.” The international community “must continue” to put pressure on Russia, he said.

Poroshenko's adviser (and a former Danish prime minister), Anders Fogh Rasmussen, says the Ukrainian president will probably urge the Danes to do what they can to stop Nord Stream 2 from going ahead.

“Contrary to Russia's claims, Nord Stream 2 isn't a commercial project,” he said by phone. “It's first and foremost a political project to ensure Russian gas bypasses Ukraine on its way to Europe.”

Haekkerup of the Social Democrats warns that giving Gazprom permission to build its pipeline would give Russia “freer hands in Ukraine, and we will become more reliant on Russia at a time when Russia's conduct is a cause of concern.”

“This isn't just energy policy, it's also security policy,” he said. “Because Russia would have the freedom to shut off supply.”

--With assistance from Raine Tiessalo

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net.

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Tasneem Hanfi Brögger, Christian Wienberg