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Europe's Nord Stream-2 risks strangling Ukraine -U.S. official

* Could deprive Ukraine of $2 billion annually -official

* Consortium eyes 2019 pipeline start date

* EU's Sefcovic says project must respect EU law

By Tatiana Jancarikova

BRATISLAVA, Nov 5 (Reuters) - A proposed pipeline to boost Russian gas supplies to Germany risks depriving Ukraine of more than $2 billion in transit fees and runs counter to the EU's goal of reducing its energy reliance on Russia, a U.S (Other OTC: UBGXF - news) . official said on Thursday.

The European Union has sought to help Kiev in the wake of Moscow's annexation of Crimea and has looked to bolster energy ties with Ukraine as Russia threatens to stop piping gas via its neighbour.

"You have to ask: Why would you support Ukraine with one hand and strangle it with the other," Deputy Assistant Secretary for Energy Diplomacy Robin Dunnigan told a conference of policymakers.

"Cutting off all gas transit through Ukraine would deprive it of $2.2 billion in annual revenue," Dunnigan said.

Russia's Gazprom already sends gas to Germany across the Baltic Sea via the Nord Stream pipelines and the proposed Nord Stream-2 project would double capacity to 110 billion cubic metres (bcm) per year.

Gazprom also sends large volumes of gas to the EU via Ukraine but has said it aims to bypass this route, most recently under a plan to build a new pipeline to Turkey.

In September, Gazprom formed a consortium with E.ON , BASF/Wintershall, OMV (EUREX: 430021.EX - news) , ENGIE (Brussels: ENGI.BR - news) and Royal Dutch Shell (Xetra: R6C1.DE - news) for Nord Stream-2 that could see Russia bypass Ukraine from 2019.

Gazprom has put the cost of the plan at up to 9.9 billion euros ($11 billion).

While the EU and United States have imposed sanctions on Russia because of its annexation of Crimea and its support for separatist rebels in eastern Ukraine, energy ties between Moscow and Europe remain deep. Russia provides around a third of the EU's energy needs.

"North Stream-2 actually threatens not only Ukraine's survivability and their resources, but it is a risk to fuel diversification in Europe, especially southeastern Europe," Dunnigan said.


European Commission Vice-President Maros Sefcovic on Thursday said he had spoken with German Vice Chancellor Sigmar Gabriel to voice the Commission's concerns about whether the project breaches EU rules.

Sefcovic noted that as only about half of the pipeline capacity between Russia and Europe was being utilised there were questions about why more was needed.

"As we showed for previous projects like South Stream, for the European Commission it's very clear that such projects must respect European law," he told the conference.

Russia's proposed South Stream pipeline to bypass Ukraine by sending gas across the Black Sea to Bulgaria was opposed by the EU, prompting Moscow to propose a new route to non-EU Turkey instead. (Additional reporting by Paul Taylor; writing by Michael Kahn; editing by Jason Neely)

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