Kwork.ru - услуги фрилансеров от 500 руб.
Home / economy / What price will have to pay Russia for the “Northern stream-2”

What price will have to pay Russia for the “Northern stream-2”

Какую цену придется заплатить России за «Северный поток-2»

The track “Nord stream-2” will be put into operation, Gazprom will receive a potential opportunity to pump from Russia to Germany in four thread two “Nord stream” to 110 billion cubic meters of gas per year. From the South, via the Black sea and Turkey, the company expects to send to Europe nearly 16 billion cubic meters annually, plus the same amount will be possible to put Turkish consumers. Originally planned chetyrehyarusny “South stream” capacity of 63 billion cubic meters per year had to be abandoned when it became clear that the building began (and billions of dollars already spent) with no hope of resolution from the regulatory authorities of the European Union.

The price for Russia

Kwork.ru - услуги фрилансеров от 500 руб.

The official motivation of the strip North and South “flows”, which should converge to the gas distribution hub in Baumgarten, Austria, in 2010 was declared the need to increase supply in the European Union, where predicted increase in annual imports by 200 billion cubic meters a year by 2030. Plans to abandon transit through Ukraine, the country’s leadership and “Gazprom” then denied it. However, in April 2015 the head of “Gazprom” Alexey Miller acknowledged that the “North stream” is the “bypass project” for Ukraine. Moreover, in 2016, the company adopted a program of decommissioning of pipeline infrastructure delivering gas to the Ukrainian border. According to Miller, by 2020 the corridor will be eliminated 4300 km of pipes 62 and compressor stations, and by 2030 10700 km. the possibility of pumping gas from Russia through Ukrainian territory virtually disappear.

With growth forecasts European demand for Russian gas is also not work. It is now clear that in developed countries, including the EU, has designated a goal of decarbonization, that is, the rejection of fossil fuels. The same Germany expects by 2050 to completely stop using coal, oil and natural gas. To invest huge funds in new pipelines, leading to potentially unreliable market, was at least short-sighted.

Did not stop the initiators of the project “flows” and the exorbitant cost of this undertaking. Moreover, “Gazprom” has decided to abandon the use of the current workable system to deliver gas from Western Siberia to the West, although the depletion of legendary fields — Urengoy, Bear, Anniversary and other leaves in the pipes is enough free capacity to receive new volumes. Began construction of a new gas corridor from the Yamal Peninsula to the Baltic sea and its branches to the Black sea.

The cost of construction of this corridor from the Yamal Peninsula to Europe were calculated by economists of the Institute VNIIGAZ in 2008. Miller signed the “Program of comprehensive development of deposits on Yamal Peninsula and adjacent waters” (the copy available to the author) States that under different scenarios the creation of such infrastructure only to Torzhok, not to mention tracks from Torzhok to the coast, will cost between $80 billion to $93 billion How many actually “Gazprom” spent for laying new pipelines to bypass Ukraine, not reported. In the same document States that the Yamal project due to the enormous cost of building a new gas transport corridor, is not justified commercially even by 2035.

The plan of the Russian leadership — that is, to bypass Ukraine and deprive it of a profit of $2-3 billion a year in transit fees — costly state-owned companies, which spent for the politicized and commercially unjustified project tens of billions, listing them in the pockets of contractors who built “corridors” and “flow”. The injured party in this scenario, the population of Russia.

The view from Europe

What was from the “flow” of Europe? Imports of Russian gas is transferred to the new routes from the old, Ukrainian, proven reliability. According to “Naftogaz”, the accident rate of the gas transportation system of Ukraine on the average kilometer of the highway almost eight times lower than Gazprom’s highways.

The Russian side blames the shortages of Europeans in Ukrainian, which she accuses of breach of contractual obligations. However, the history of Russian gas supplies to Ukraine shows that the overlap of 2006 and 2009 took place at the initiative of “Gazprom”. And accusations of unauthorized selection of gas to Ukraine in 2009-2019 years have not led to lawsuits from outside “Gazprom”, which casts doubt on the Russian version of events.

A reduction of a third of gas supplies to Europe in the last quarter of 2014 and the first quarter of 2015, “Gazprom” explained the desire to stop reverse gas supplies to Ukraine. For this purpose Gazprom has lost about $6 billion in lost profits. The unpredictability of such decisions and their politicization may be an additional risk factor for European energy security in conditions when the main channel of gas supply from Russia will focus on “stream” on the Baltic.

To this we must add such an important quality of Ukrainian transit route as ensuring flexibility of supply. Ukraine, with its huge underground gas storage facilities served and serves as a “safety cushion” to compensate for emergency, seasonal and even daily variations in gas demand. “Flow”, which pumped a constant volume react to changes in demand in the state. It is not excluded that such risk factor will lead to an increase in the price of Russian gas for Europeans.

Denmark have no more objection to the construction of “Nord stream-2”. Nevertheless, the project left and other opponents. Coordination of the operation of the new route should, according to the rules of EU competition law, held in Germany, however, the decision of the German regulator must be approved by the European Commission, where his word will tell the representatives of the countries that initially objected to Gazprom’s project: Poland, Slovakia, Italy, the Baltic States. Much sympathy to the “Gazprom” does not feel the current composition of the European Commission. It is also worth remembering, as the complaint of Poland, the European court has limited the right of Gazprom to exclusively pump gas via the German pipeline OPAL. The volumes that have been removed from this pipeline, went, by the way, the old powerful and flexible route through Ukraine. Similar to the judicial conflict awaits the EUGAL pipeline, which is designed to receive gas from “Northern stream-2”.

It turns out that to completely abandon the Ukrainian transit, Gazprom cannot yet. First, the supply of gas flexibility that the Baltic pipe is not able to provide. And secondly, “Gazprom” can not use the full potential of the “flow” because it interferes with his monopoly status. The so-called “third energy package” of the EU, and especially recently adjusted the composition of the Gas Directive put Russian company facing the need to radically revise the model behavior in the European gas market.

The Apple of discord

When in 2012 the European energy regulators started the investigation of “monopoly practices” resorted to “Gazprom” in Eastern Europe, the company urgently began to change tactics: the output from the chain of marketing intermediaries to normalize pricing in line with reality, to abolish the unfair terms in contracts, etc. By 2019, all of the claims of the investigators of the Commission were removed and Gazprom got rid of the the risk to pay a huge fine for abusing its dominant position in the gas market in some countries.

Now the Europeans actually need to reform the gas industry in Russia, because without a radical reform of “Gazprom” simply can’t abide by the rules of the EU. Simplifying full of details and reservations rules, we can conclude that Russia, if she wants to use the potential of new pipe for all hundred percent have to form an independent owner or operator of the “Nord stream-2” with transparent and fair costs, and to prevent the pipe gas suppliers outside Gazprom. To fulfill such requirements does not allow the Russian legislation, according to which the only exporter of gas is the owner and operator of the Russian gas-transport system “Gazprom”.

While it is difficult to guess what the result of this conflict between antitrust principles of the Europeans and the Russian love of state monopolies. To European pressure on Moscow in order to build a civilized and competitive gas market in Russia will probably join the oil companies with gas reserves and wishes to see equal conditions for business for all players. To the supporters of the reforms can be followed by the contractors who built the gas becomes unnecessary. In the case of partition of a monopoly they could put capital on acquisition of controlling stakes in the most profitable divisions of the divided company with a significant reserves and production potential for the production of liquefied natural gas.

It is possible that we will see more independent from “Gazprom” and organized on the model of “Transneft” national transmission company, and at the same time and competing independent commercial gas company. It is noteworthy that such a development could trigger a mega project initiated by a monopolist.

© 2019, paradox. All rights reserved.

Check Also

LA Mayor Garcetti crowned Covid-19 ‘dictator’ after shutting off utilities at TikTok star’s Hollywood party mansion

In a tweet, Garcetti announced that he had instructed the city to disconnect utility services …

Leave a Reply

Your email address will not be published. Required fields are marked *