COMMENTARY: Gazprom to squeeze out Ukraine with Nord and South streams
MOSCOW. Feb 24 (Interfax) - After three years of diplomatic smiles, Gazprom has finally announced that it plans to completely exclude Ukraine from Russian gas deliveries to Europe. Immediately after the end of the recent cold spell, the Russian gas giant began to make good on this promise, redirecting a portion of Ukrainian transshipments through Belarus.
History
At different times, Gazprom has characterized the conduct of its Ukrainian partners differently. During the transit crises of 2006 and 2009, the company directly accused Ukraine of theft, but once the gas wars were over it backed away from harsh words.
Despite the changing rhetoric towards Ukraine, Gazprom always considered this country to be an area of uncontrollable risk. "It's virtually impossible to balance the volume of gas on entry and at the exit from Ukraine's gas transport system with the amounts supplied under the contracts of LLC Gazprom Export. Exports through the territory of Ukraine could be subject to risks related to unauthorized offtake of gas. The lack of a stable political and social situation in such countries could lead to the violation of contractual relations concerning transit and disruptions in deliveries of natural gas under the export contracts of OJSC Gazprom. There have been cases when some of OJSC Gazprom's natural gas has been misdirected in the course of transportation through the territory of Ukraine, despite its interest in stability," the Russian company has warned year after year in its reports.
Even in peacetime, when temperatures plunged Gazprom complained that Ukraine was using transit gas for itself. During the last spell of unusually cold weather in Europe in January 2006, Ukraine "used all the gas it wanted, as if heaven had already come to earth," Gazprom deputy CEO Alexander Medvedev said.
This situation was repeated in February 2012. "Our Ukrainian partners took as much gas as they thought necessary from the export pipeline," Gazprom head Alexei Miller said. A source at Gazprom said Ukraine siphoned off 438.3 million cubic meters of transit gas intended for customers in Europe in the first 15 days of February. Europe, meanwhile, frantically looked everywhere for additional gas and gas prices in some spot markets spiked 150%.
Ukraine does not intend to privatize its pipeline, as major transit countries such Belarus, the Czech Republic and Slovakia have done.
Acknowledgement
Counting its "financial and reputation damages" following the cold snap, Gazprom got up the steam to say that it no longer wants to seek Ukraine in its export strategy.
After a meeting between Miller and President Dmitry Medvedev, who chaired Gazprom's board of directors prior to being elected president, the company's spokesman Sergei Kupriyanov made an historic announcement.
"After Gazprom has delivered all its planned gas transportation projects - South Stream, running at full capacity, Nord Stream, with two additional lines, and given the transportation capacity the company owns in Belarus and the Black Sea, Ukraine's transit significance for Russian gas imports will be zero," Kupriyanov said.
That Nord Stream and South Stream are aimed at eliminating Ukraine from the European gas game became clear three years ago, when it was announced that the design capacity of the South Stream gas pipeline would be 63 bcm - twice the figure mentioned before. Combined with Nord Stream's 55 bcm, they easily exceeded Ukrainian transshipments, which dropped to 104.2 bcm in 2011.
Action
Nord Stream at the time of its launch last year was positioned as a pipeline against intractable Ukraine. However, until recently any change in pressure in the undersea pipeline was accompanied by a drop in volume along the Yamal-Europe pipeline that runs through Belarus and Poland to Germany, while Ukrainian transshipments did not suffer.
But it turns out that Gazprom was thus freeing up the Yamal pipeline for gas from the Ukrainian corridor. An industry source told Interfax that, with volume in Nord Stream unchanged, the amount of gas being pumped through Yamal-Europe has increased dramatically to near-maximum levels since the middle of last week. Nord Stream and Yamal together now carry more than 114 mcm per day, over 50 mcm more per day than the Yamal line carried at the same time last year.
There have not been any major changes in the total amount of gas exports, which means that Ukrainian transshipments have fallen by this amount. The figure of 50-55 mcm per day amounts to 17% of gas transshipments through Ukraine in January, and is equivalent to about 20% of annual average transshipments.
