In Digest, Europe - East, Europe - West, Ukraine

Reuters, Thursday, Sept 10 2015

Slovak Prime Minister Robert Fico on Thursday called a deal between Russia’s Gazprom and its European partners to expand the Nord Stream gas pipeline a “betrayal” that would cost Ukraine and Slovakia a combined billions of euros in transit fees.

Slovak PM Robert Fico (L) and Ukrainian PM Arseniy Yatsenyuk at ceremonial opening of 'reverse flow' of Russian gas to Ukraine in Sept 2014 (David Cerny, Reuters)

Slovak PM Robert Fico (L) and Ukrainian PM Arseniy Yatsenyuk at ceremonial opening of ‘reverse flow’ of Russian gas to Ukraine in Sept 2014 (David Cerny, Reuters)

Last week, Gazprom and its European partners signed a shareholders’ agreement on the Nord Stream-2 gas pipeline project that will bypass Ukraine and run beneath the Baltic Sea to Europe, bringing Europe closer into Moscow’s energy orbit. Gazprom signed the deal with Germany’s E.ON and BASF/Wintershall, Austria’s OMV, ENGIE of France and Royal Dutch Shell. It stipulates that new pipeline capacity from Russia will come online in 2019.

“Suddenly an announcement came from Gazprom signing a contact with companies from western EU member states about building another branch of Nord Stream. They are making idiots of us,” Fico said.

“For months, there have talks at the European Council about the need to help Ukraine remain a gas transit country, to help it through difficult winter months,” Fico told a joint news conference with Ukrainian Prime Minister Arseniy Yatsenyuk.

“They have betrayed an EU member state — Slovakia — and are going against political discussions with Ukraine at the European Council.”

Slovakia is the main entry point for Russian supplies to the European Union via Ukraine but Russia — which is embroiled in conflict with Kiev — wants to find alternate routes.

Fico said doing so through the Nord Stream expansion would cost Ukraine billions of euros in badly-need transit fees and deprive Slovakia of hundreds of millions of euros in revenue.

“I will address this issue in this spirit at the European council meeting,” Fico said.

Russia provides for around one third of EU energy needs, but around half of the gas the EU imports from Gazprom is shipped via Ukraine, with which Russia is in conflict.

The Prime Minister also described as a success Slovakia’s decision last year to pump gas eastward to Ukraine ahead of winter, saying it was possible to further increase the annual capacity of 14.5 billion cubic meters. He did not say by how much, but cautioned that any decisions on future gas flow increases would be up to the European Commission and consider the need for any existing gas contracts.

“There are technical possibilities to further expand the capacity,” Fico said. “We understand Ukraine’s needs concerning gas.”

One year ago, Slovakia began to send Russian natural gas to Ukraine from western Europe by reverse-flow — that is, transporting the gas in the opposite direction to its normal flow.  Ukraine was facing a threat from Russia to cut off supplies because of a massive debt.

Nord Stream-2 pipeline expansion hurts EU unity, Poland Says

Bloomberg, Sept 8, 2015

The planned expansion of a natural gas pipeline directly from Russia to Germany hurts European Union unity when dealing with the conflict in Ukraine, according to Poland’s President Andrzej Duda.

The agreement signed last week between Russia’s Gazprom PJSC and European companies including Royal Dutch Shell Plc, EON AG and Engie to expand the Nord Stream pipeline under the Baltic Sea, “completely neglects Polish interests,” Duda said Tuesday at an economic forum in Krynica, Poland.

The Gazprom-controlled Nord Stream-2 project envisages two pipelines directly from Russia to Germany, bypassing transit countries including Ukraine and Poland, with an annual capacity of almost 15 percent of current EU demand when it starts in 2019. The link would reduce Russia’s dependence on Ukraine, a linchpin in gas supplies to Europe, amid a conflict between the ex-Soviet nations.

“The insecurity in this context stems from the egoism of some nations and their complete disregard for the interest of other nations,” Duda said. “That makes it hard to believe in Europe’s unity.”

Before Gazprom can start pumping gas via Nord Stream-2, Russia will need to reach an accord with the EU to comply with the bloc’s energy rules, which require that gas marketing and transport be separated.

Update: In view of planned Nordstream gas pipeline, Gazprom will halve the capacity of TurkStream, Reuters, Oct 6, 2015

Read also:
Gazprom says reverse flow of Russian gas to Ukraine is illegal,, June 10, 2015

Gazprom confirms Turkish Stream’s delays, blames Ankara’s political instability, Natural Gas Europe, Sept 14, 2015


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