The issue of terms of gas transit becomes the most important for Russia and Ukraine

By D.Rozanov

The current conflict between Naftogaz and Gazprom was inevitable, as it is part of the process of divorce of companies on the eve of the end of the 2009 contract. However, everyone expected that it would start in 2019, but it happened a year earlier. Peacefully, the parties would clearly not separate. The situation is aggravated by the fact that companies need to sign a new transit agreement. In 2017, Ukraine transited 93.5 billion cubic meters of gas. m of gas. Even if Gazprom builds all bypass gas pipelines, there will not be enough of them to drain the Ukrainian route: the loading of Nord Stream (in 2017 it pumped 51 billion cubic meters out of 55 possible), Nord Stream-2 - 55 billion cubic meters . m, "Turkish Stream" - 31.5 billion cubic meters. Total - 90.5 billion cubic meters. m, that is 3 billion cubic meters. m still have to pump through Ukraine, and given the uncertainty of the fate of the second thread of the "Turkish Stream" and the delay with the introduction of the continuation of the "Nord Stream" in Europe, in 2020 the need for pumping through Ukraine could increase to 40 billion cubic meters. m.

Until the end of next year, Gazprom and Naftogaz will have to work out terms for cooperation after 2019. On a bilateral basis, they obviously can not do it. Mediation by Europeans should allow the parties to sign a market transit contract. The agreement on the supply of gas for the needs of Ukraine is secondary, as Kiev as a whole is pleased with the reverse scheme: the money goes to European private companies, which should increase the loyalty of the political elites of the EU. But this scheme depends on transit. The pumping of gas will cease, and the opportunity to expand it will be lost. Therefore, the issue of the terms of gas transit and volume becomes the most important for Russia and Ukraine.

When developing transit conditions, the very environment of confrontation between Russia and the West, which was mentioned earlier, becomes of significant importance. The US openly promotes its LNG to the European market. So far, the volume of supply is insignificant, since the price level in Europe is too low. We must remember that there are no state companies in the US and Washington can not specify the market for them. Therefore, he seeks to create favorable conditions in Europe. In particular, to reduce the share of Russia in the European market, as a result of which prices will grow and US companies will profitably deliver LNG there.

The main element of this strategy is torpedoing of bypass gas pipeline projects. The US managed to close the South Stream, now they have concentrated their efforts against the Northern Stream-2. The preservation of the transit of Russian gas through Ukraine gives Washington the opportunity to implement a wide range of scenarios: from an increase in the cost of transit, which ultimately leads to a rise in prices, to a reduction in the physical pumping of Russian gas (due to the deterioration of gas pipelines, attacks by radicals like explosions of TPPs, ). In particular, Ukraine can start arresting transit gas as a debt recovery from Gazprom on the decision of Stockholm Arbitration and a home-grown fine on the antimonopoly case. In response, Gazprom will block the transit. As a result, the US will inflate the story of an unreliable supplier and introduce under this pretext a sanction against Nord Stream-2. Transit, even in a truncated form, but through Ukraine will remain.

It is worth assuming that at present the conflict between Naftogaz and Gazprom will move slowly and only in the segment of Gazprom's appeal. Negotiations on the terms of cooperation after 2020 are likely to be frozen until the moment when it will be possible to say definitely whether Gazprom will be able to build a "Nord Stream-2" or not. In the case of the construction of the gas pipeline, Ukraine becomes a "closing" transit: if Europeans buy Russian gas at the level of 2017 or more, then part of it will pass through Ukraine, if purchases fall, the Ukrainian pipe will remain empty. But in this case, most of the GTS Kiev will have to be written off as a scrap, keeping only one of the gas pipeline threads and one or two UGSs in working order. Naturally, the Ukrainian leadership does not like this option, and they will fight for transit in every possible way. But the denouement of this story is already close, since the construction of the "Nord Stream-2" should be started in 2018.

16.04.2018

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