In the summer, we tend not to think about (Russian) gas, which instead comes back to mind on cold winter days. Currently, greater efforts are being made to implement (or hinder) new gas pipeline projects to supply Europe from Russia. One of these is Nord Stream-2, the younger brother of Nord Stream, the gas pipeline from the Russian Federation to Greifswald in Germany, which passes under the Baltic Sea without crossing other countries. In spring this year, the companies interested in the project, Engie (France), Uniper and Wintershall (Germany), Royal Dutch Shell (The Netherlands) and OMV (Austria) agreed to finance the gas pipeline, which has a total cost of 9.5 billion euros, with a respective share of 10%, while the remaining 50% would be covered by Gazprom. It appears to be a decisive step forward in the implementation of Nord Stream-2, yet the European Commission and Washington have their doubts on this project: it is no coincidence that the package of new sanctions that the USA intends to advance on Russia includes this same gas pipeline project. The new sanctions have already been approved by the Senate, and are now being examined by the House of Representatives. If confirmed, the President of the United States will have the right to impose sanctions on companies that invest or sell goods or services for more than 5 million dollars a year under Russian gas pipeline projects. According to the text approved by the Senate, Nord Stream-2 would "have a negative impact on European energy security" and on the Ukrainian economy.
The companies interested in the Nord Stream-2 project, Engie, Uniper and Wintershall, Royal Dutch Shell and OMV will finance the gas pipeline, which has a total cost of 9.5 billion euros, with a respective share of 10%, while the remaining 50% would be covered by Gazprom.
A negative turn for Ukraine
As a matter of fact, there may even be negative consequences for Ukraine. If the two gas pipelines will be built to avoid passing through Ukraine, from 2020 onwards Kiev would lose the income from gas transit to Europe, and this monopoly would bring obvious economic benefits for Russia. "If we supplied 30 billion cubic meters of gas for 25 years via Nord Stream, we would save 43 billion dollars compared to the Ukrainian route," said Alexey Miller, CEO of Gazprom, at the St. Petersburg International Economic Forum. This advantage is not only likely to ensure lower prices for Europe than now, but - contrary to what is claimed in the USA - also greater energy security for Europe. It is clear that the foreign ministers of the two countries that would benefit the most, Germany and Austria, have promptly issued a statement where the US action is declared "illegal". "US law is aimed at protecting jobs in the USA within the natural gas and oil industries," the ministers claim. The representatives of the companies involved also reject the possible sanctions. Isabelle Kocher, CEO of the French company Engie, said: "The use of sanctions by the USA against projects to be implemented outside of the USA, and carried out by non-US corporations that are not financed in US dollars, is pure interference in the affairs of European countries, which is unacceptable." The same goes for the CEO of the German company Uniper, Klaus Schäfer, who has asked not to turn the project into a matter of global politics and leave it up to the Europeans to decide on the issue of energy supplies to Europe. Many industry experts have expressed the view that the US sanctions are only promoted in order to boost the export of US gas to Europe, which is currently low, at the expense of Russian supplies.
The agreement for the implementation of the Turkish Stream was signed in fall 2016 and provides for the construction of two lines of 15.75 billion cubic meters of gas per year, one of which is dedicated exclusively to the Turkish domestic market.
All players in the starting blocks
Going back to the actual implementation of the gas pipeline, the request to build Nord Stream-2 arrived in March 2017 in Germany and in April in Denmark, whereas in Sweden it arrived as early as September 2016. Meanwhile, since the consultations on gas pipeline construction permits have started in Germany, on July 17 approximately 200 notes and observations arrived. Sweden has also set new terms for granting the construction permit: a detailed plan must be presented for the disposal of the pipes once their use is completed, i.e. within a few decades. Such a request was never made in the past for other gas pipelines. Finland, instead, seems to have no claims on the gas pipeline. The Director of the Energy Department of Finland's Ministry of Economic Affairs and Employment, Liisa Hankinheymo, told the Russian newspaper Izvestija: "the installation of the gas pipeline will not affect the gas market in Finland, yet it could help improve the situation of the load on the local industry." However, Gazprom's request has not yet arrived; it could arrive in September, or at least six months before the start of construction, which is scheduled for 2018.
The new Turkish route for Moscow's gas
There are open doors also for another project, the Turkish Stream, which from Russia reaches Turkey, passing under the Black Sea. The agreement for its implementation was signed in fall 2016 and provides for the construction of two lines of 15.75 billion cubic meters of gas per year. One line will be entirely dedicated to the Turkish domestic market, and should be concluded in spring 2018, whereas the second line is reserved for the European market and should be completed by the end of 2019. On May 7 this year, Gazprom started laying down the pipes in shallow water and, on June 23, on the Pioneering Spirit pipe-laying ship, Russian President Putin inaugurated the laying in deep waters. Speaking on the phone with Turkish President Recep Tayyip Erdogan, Vladimir Putin stated: "If our partners agree, we are ready to supply gas through Turkey to Southern and Southeast Europe. And we know these partners are interested." "The market demands Turkish Stream," Alexey Miller said. "Speaking about Turkey, we can see that the demand for Russian gas is on the rise, and our supplies currently represent 53% of Ankara's national market. As a matter of fact, since the beginning of 2017, the growth in supplies over the same period of 2016 amounted to 2 billion and 630 million cubic meters." Recently, on July 11, at the 22nd World Petroleum Congress in Istanbul, Burhan Ozcan, the director of the Turkish state-owned company Botas for gas pipeline management, announced that a definitive agreement has finally been reached between Turkey and Gazprom to finance Turkish Stream. At the opening of the World Petroleum Congress, Turkey's Minister of Energy and Natural Resources, Berat Albayrak, defined the gas pipeline under construction as a "key project" for the supply of gas to his country and for the diversification of supply routes for the European Union. We will know soon enough whether the European Commission agrees: Brussels is currently trying to gather delegations from different countries to negotiate energy projects with Russia. And to include them in, or exclude them from, the third energy package standards.