Nord Stream-2: The Funeral of Transit Powers

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October 27, 2015

Pavel Shipilin

“Nord stream – 2” will finally turn Germany into the main partner of Gazprom in Europe. Ukraine, Poland and the Baltic states, inspired by the fight with dependence on Russian gas, voluntarily refused the role.

The other day Kiev was explained why the new Russian pipeline under the Baltic sea will be implemented, despite its resistance. “When we say that it is not economic, but purely political project, aimed against Ukraine, we forget that it involves European companies. Gazprom holds only 51 percent,” – told “European Truth” a source in the European Commission involved in the negotiations with “Gazprom”.

In other words, while arguing that Moscow is taming Kiev using a gas baton, it is necessary to remember that the accomplices in this case are also London (Shell), Amsterdam (Shell), Berlin (E. ON, BASF/Wintershall), Paris (ENGIE) and Vienna (OMV).

In addition, the source of the online newspaper hinted that Kiev has little sympathy among major countries in the EU. The reason is the actual bankruptcy of “Naftogaz”. And a bankrupt transit partner is very unreliable, so Russia has a lot of support in Europe.

“Nord stream – 2” has support in Eurogas association, which unites 44 gas companies of Europe. “Strange as it may sound, direct gas deliveries from Russia to Germany under the Baltic sea do not contradict common EU energy policy, but support it. The gas that comes to Europe bypassing Ukraine, Belarus or other countries, comes to Germany — a country with high competence, free market. The gas can be supplied at competitive prices, including to Eastern Europe”, — said recently the President of Eurogas, Gertjan Lankhorst.

Meanwhile Eastern Europe, immersed in the struggle with “Gazprom” got trapped in a real bondage to the producers of liquefied natural gas.

Lithuania, which a year ago had brought a mobile LNG terminal to Klaipeda, was surprised to find out that the gas from Norway is one and a half times more expensive than Russian. And even tried to adjust its contractual obligations. Even more surprised where the poles, who also acquired the LNG terminal — it turns out, the price of gas from Qatar is twice that of the hated “Gazprom”. Both countries have contracts for twenty years, which includes the principle of “take or pay”.

Recently a contract was signed for construction of a gas pipeline between Poland and Lithuania. The European Commission announced it a priority and has allocated 300 million euros. Presumably, in a few years Poland and Lithuania will have the opportunity to sell each other the surplus of expensive gas. What are they trying to prove to the world is a mystery to me.

But now “Gazprom” received a good argument in litigation about unfair price. They may in fact pay! And even more, than to Russia.

This applies to Ukraine as well, by the way. If Kiev is ready to buy more expensive reverse gas, then the argument about the too expensive price of “Gazprom” loses all meaning.

Implementation of “Nord stream – 2” meanwhile is taking on tangible features. The desire to participate in the financing of the project and in the next issue of Eurobonds of “Gazprom” was announced by the Italian group “Intesa Sanpaolo”. They already have experience with securities of the Russian monopoly. “The last 1 billion euros issue flew instantly, in a flash, the demand twice exceeded the amount of Eurobonds”, — told RIA Novosti the chairman of the board of directors of “Banca Intesa,” Antonio Fallico.

The President of Eurogas believes that it is wrong to turn the gas business into politics. Evaluating new projects to transport Russian gas to Europe, one need to think foremost that it is a significant investment in the infrastructure of the Old world, and not about the strengthening of Russian power in the market of “blue fuel”. Gertjan Lankhorst does not agree with those who consider “Gazprom” a monopolist, since only a few states in Europe depend on its supplies.

It is unlikely that Ukraine or the Baltic states will listen to the opinion of professionals who know how to count money, and not get political dividends from loud statements. After all, the struggle with “Gazprom” is so exciting. And so far removed from real economy.

After 2019, after the end of the festivities of the funeral of the great transit powers, they will have to choose to buy gas in Germany or in Russia. In Germany it will, of course, be more expensive. But it is not impossible that the same Poland will prefer Russian gas, coming from the West, and not from the East. Independence from common sense is not cheap.

And Russia doesn’t care. We will receive our money in any case.

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