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Germany proposes consortium to protect Ukraine from Nord Stream losses

PALANGA, Lithuania, (Reuters) - Germany has proposed setting up some sort of consortium to ensure that Ukraine retains its role as a transit country for Russian gas once the Nord Stream 2 gas pipeline is operational.

German foreign minister Heiko Maas made the proposal, without giving details, during a meeting on Friday with his counterparts from Baltic countries, which oppose the pipeline.

Germany has backed Nord Stream 2, which will run from Russia to Germany through the Baltic Sea, but Chancellor Angela Merkel said last month that the project cannot go ahead without clarity on Ukraine's role as a transit route for gas.

"We are making intensive efforts to allow the transit of gas through Ukraine in the future," Maas said after meeting the foreign ministers of Lithuania, Estonia and Latvia in Lithuania. "We are considering setting up a consortium to ensure that that is the case," he said, but did not elaborate.

An initiative of Russia's Gazprom and five European companies, the new pipeline on the Baltic seabed would double Russia's export capacity to Germany.

Baltic states fear the pipeline could increase reliance on Russian gas and undermine Ukraine's role as a gas transit route, which provides valuable revenues to the country that saw its Crimean peninsula annexed by Russia.

"It is very important that no such project would give any (gas) supplier greater leverage over European Union policies," Estonia's Foreign Affairs Minister Sven Mikser, said.

Maas's comments will do little to assuage public concerns in the three Baltic countries, once ruled by their giant eastern neighbour but now part of the European Union and NATO.

"We consider this project very much out of line with the EU's energy policy and quite detrimental to Ukraine," said Lithuanian foreign minister Linas Linkevicius. "We believe it is not a purely economical project, it has a political dimension."

Poland also opposes the pipeline, which would cost Kiev valuable transit income and could make it easier for Russia to cut supplies to in-between countries without inconveniencing Germany, its biggest customer.

This week, Poland's anti-monopoly office launched proceedings against the developers of Nord Stream 2, saying the project raised competition concerns.

Maas ruled out any increase in his country's military involvement in the Baltic region, where Germany leads a deployment of about 1,000 NATO troops, one of four such battle groups designed to deter Russia from meddling in the region.

"For the time being, it will not be possible for us to enhance troop numbers here," he said. (Reporting by Andrius Sytas, editing by Thomas Escritt and Susan Fenton)

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