Russia plans to shift all its natural gas flows crossing Ukraine to a route via Turkey, a surprise move that the European Union’s energy chief said would hurt its reputation as a supplier.
The decision makes no economic sense, Maros Sefcovic, the European Commission’s vice president for energy union, told reporters today after talks with Russian government officials and the head of gas exporter, OAO Gazprom (GAZP), in Moscow.
Gazprom, the world’s biggest natural gas supplier, plans to send 63 billion cubic meters through a proposed link under the Black Sea to Turkey, fully replacing shipments via Ukraine, Chief Executive Officer Alexey Miller said during the discussions. About 40 percent of Russia’s gas exports to Europe and Turkey travel through Ukraine’s Soviet-era network.
Gazprom Say Russia Needs To Build Turkey Pipeline Since It’s Shutting Down Gas Shipments To Ukraine
As of right now a significant amount of Russia’s natural gas travels through Ukraine and into Europe. 63 billion cubic meters of gas travels through this line each year. This supply has been threatened by the conflict in Ukraine, however. In December, Putin announced that Russia was scrapping plans to build the South Stream pipeline, a pipeline which was supposed to bypass Ukraine. TASS reports:
The South Stream gas pipeline worth €15.5 billion was intended to pump 67 billion cubic meters of Russian natural gas to Europe annually. The pipeline’s underwater section 900 km (559 miles) long was intended to run along the bed of the Black Sea from the Russkaya compressor station on the Russian shore to the Bulgarian coast.
Russian President Vladimir Putin announced on December 1 that the project to build the South Stream gas pipeline was closed due to the European Union’s unconstructive approach to cooperation in that sphere, including Bulgaria’s decision to stop the construction of the pipeline’s stretch on its territory.
Instead, Russia will build a gas pipeline to Turkey where a gas hub on the border with Europe will be created, Putin said.
Today, however, Gazprom CEO Alexei Miller has announced that within several years no gas will be shipped through Ukraine. Instead, Russia will construct the Turkey Stream pipeline, shifting that supply through Turkey, and if Europe wants that gas it will need to build a pipeline along the border of Greece and Turkey in order to receive that gas. The Kyiv Post reports:
“They have at the most a few years for this. It’s a very, very tight schedule. In order to meet the deadlines, efforts to build new trunk pipelines in EU countries must begin right now, otherwise that gas will end up on other markets,” Miller said.
Business Standard is running a related headline, “Europe at risk of being cut off from Russia :Gazprom.” The article focuses on warnings from Miller that transit supplies through Ukraine, even in the short term, are at risk:
“Ukraine, due to financial difficulties, was not able to buy the necessary volume of Russian gas in November and December last year and significantly depleted its reserves of gas in underground storage,” Miller said.
Gazprom said for its part that it had met its obligations on supplies to Ukraine under a gas accord reached in November in Brussels but that Ukraine was not complying with its terms.
Ukraine’s state gas company Naftogaz “is acquiring gas in lower volumes than in the Brussels accord,” Gazprom complained.
Ukraine is taking gas out of its underground stores at a rapid rate, leaving supplies that are “not enough to reliably get through the winter period,” Gazprom said in a statement.
While Gazprom’s warning that Ukraine does not have enough gas is likely accurate, Miller seems to be sending a different message – that Europe needs to lessen its dependency on Ukraine.
It also bears noting that at various times in the last several months, Russia has threatened European countries, saying that if they reverse gas flow into Ukraine in breech of any negotiated deal with Russia, then their own gas supplies could be cut off.