Russia’s Pipeline Building Is Scaring the Bejesus out of Ukraine

Turns out Kiev needs Gazprom more than the other way around

Ukraine has just done some calculating. Turns out that when all of Russia’s current pipeline building projects are finished Russia will no longer need to transport any amount of EU-bound gas via Ukraine:

“As it is, Russia is moving its traditional Ukraine transit to Nord Stream I,” says Andriy Kobolyev, CEO of Naftogaz [the national oil and gas monopoly] in Ukraine.

“If you look at the numbers on gas consumption in Europe out to 2020, it is obvious to me that if we get a Nord Stream II and if we get the expansion of Turkish Stream, which is already happening, with two pipelines there now instead of one, then that will mean Ukrainian transit of Russian gas into Europe with equal zero.”

Ooops!

The transit fees Ukraine receives from Gazprom cover 10% of its budget. In a few years that money could dry up completely.

The irony is the reason Russia was so intent on building alternative routes for its gas exports was that Ukraine had proven itself such a difficult and unreliable partner constantly demanding greater transit payments for itself while failing to pay for its own gas imports.

In the short term this put Russia in a difficult situation especially since the biased EU kept siding with troublemakers in Kiev, even at the price of obstructing its own gas supply.

However in the long term Ukraine certainly is not the only way for Russian gas to reach its markets. (Despite Brussels’ and Washington’s best efforts to keep it so.)

 

Russians are powering through with the parallel Nord Stream II pipeline across the Baltic to northern Germany. When European companies withdrew from the project on the account of Polish government obstruction Gazprom calmly announced it would finance the entire construction by itself.

Turkish Stream across the Black Sea which will ultimately supply Southern Europe (primarily Italy) is likewise back on track. Turks have already ratified the deal clearing the path for construction to begin this year and be finished by late 2019 — exactly when Nord Stream II is planned to be complete as well.

And to think Kiev just needed to be a bit more reasonable, and the Russians may have never seen the need for alternative export routes.