Gazprom will not be able to abandon gas supplies through Ukraine in 2020, because by that time the German branch of Nord Stream 2, the EUGAL gas pipeline in Germany, will not be ready – says Kommersant. This is confirmation of BiznesAlert.pl information. This means that at least in 2020 it will need a new transmission contract with Ukraine. This may be important for the EC-Ukraine-Russia talks.
Gazprom will wait for EUGAL
Gazprom originally declared that it would abandon the Ukrainian route to Germany along with the completion of the transmission contract with Naftogaz, which remains in force until 2019. The new gas pipeline across the Baltic Sea will also be ready at that time. After completion of the contract, the Russian company will be able to send about the planned capacity of 55 billion cubic meters.not more than 34 billion cubic meters a year via Nord Stream 2. For this reason, it will be necessary to sign a new transmission contract with Ukraine.
Nord Stream 2 will be built by the end of 2019, and its branch in Germany – in 2020, according to the Gascade comment for Kommersanta. However, by the end of next year, one of the two strands of the EUGAL gas pipeline will be ready. It will allow to send 9,9 billion cubic meters annually to Germany, and 21 billion cubic meters annually to the Czech Republic – In addition, Gazprom will be able to use the free 2,7 billion cubic meters Nord Stream 1 arms named NEL, which goes to the Netherlands.
– In practice, in 2020 Gazprom will not be able to use more than 34 billion cubic meters annually of Nord Stream 2. The full use of the gas pipeline will only be possible after the completion of EUGAL – Gascade reports. The alternative is the Ukrainian route which the Russians initially wanted to give up. In the case of the Nord Stream 1 branch named OPAL, the construction schedule was coordinated with the change of the transmission contract with Ukraine. If it is impossible to convince the Balkan partners to build the Turkish Stream branch from Turkey, the Russians may need as much as 43 billion cubic meters annually in Ukrainian gas pipelines. Gazprom declined to comment.
The tempo of construction of EUGAL may also be influenced by the growing social protests, which BiznesAlert.pl informed about. West Pomeranian voivodeship is among others against the investment. In turn, Turkish Stream was reduced to two threads with a total capacity of 31,5 billion cubic meters annually. The Russians began works aimed at reducing the capacity of the Southern Corridor, which was to supply gas to the original version of the project: South Stream, which was not in accordance with European law and could not be created. The new version – Turkish Stream – originally assumed four threads with a total capacity of 63 billion cubic meters annually, but now two are taken into account, of which the second would need a branch in the Balkans.
Ukraine will still be needed
Kommersant emphasizes that the above calculations are based on the current demand for Russian gas in Europe. It can grow, and with it – the demand for gas pipeline capacity in Ukraine. In March, the Dutch government is to decide on the possible reduction of production from the Groningen field from the current 21,6 billion cubic meters annually to 12 billion. Such a recommendation was issued by the regulator after recent earthquakes caused by exploitation. The Netherlands may therefore need an additional 10 billion cubic meters annually.
In order to fight for this market, Gazprom will have to use supplies via Ukraine by 2020. For this reason, even if Oxford Istitute for Energy Studies estimates that Gazprom will have both roads ready to bypass Ukraine – via Turkey and Germany – in 2024, it will not necessarily be able to completely abandon delivery through the Ukrainian route. This may mean Russia’s greater coherence in trilogue talks with the European Commission and Ukraine on the conditions for implementing the Arbitration Tribunal’s decisions in Stockholm, which Gazprom has not yet complied with. Judgments on supply and transmission contracts with Naftogaz are beneficial for Ukraine.