11:58 GMT16 January 2021
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    Denmark has still not given consent for the construction of the Nord Stream 2 gas pipeline in its territorial waters, which may lead to the project not being completed before the end of 2019. Does this mean that Russia will have to plead to Kiev for it to allow Russian gas to be transited through Ukrainian territory?

    The project, worth €9.5 billion and meant to ensure the delivery of Russian gas to Germany, has already received the necessary permits from all states on the Baltic through whose territorial waters the gas pipeline will pass, except for Denmark. Russia has been awaiting the decision of the Danish Energy Agency regarding the two proposed routes for many months, calling into question the completion of construction on schedule. The Kingdom of Denmark has given no answer at all, either positive or negative.

    The Financial Times writes that any delay in the construction of the pipeline would be another blow to the project. The newspaper points out that the completion of works scheduled for the end of this year coincides with the expiration of the gas transit contract between Ukraine and Russia’s Gazprom. Does this mean that Russia will fall into a stalemate and have to “plead for Ukraine to permit transit”? What could be the consequences for suppliers and consumers of Russian gas if Denmark continues to remain silent? Speaking to Sputnik, Director of the National Energy Institute Sergei Pravosudov has answered these questions.

    “Even if Nord Stream 2 is put into operation by the end of the year, it will not be able to immediately operate at full capacity. This was not supposed even theoretically because, simultaneously with laying the pipe on the seabed, there is work underway to create continental infrastructure and a gas transmission network for the further transportation of gas coming from Nord Stream 2. German companies are building the European Gas Pipeline Link (EUGAL) to the Central European Gas Hub in the vicinity of Baumgarten in Austria. And on the territory of the Czech Republic, the Capacity4Gas Project’s pipeline is being built with two-stage commissioning in 2019 and 2021. New gas pipelines never work at full capacity. It takes two-three years until consumers get used to getting gas through a new route. The situation is the same with ‘TurkStream’ for creating a transport system on land”, said Sergei Pravosudov.

    The expert believes that, undoubtedly, the contract for the gas transit through the territory of Ukraine will need to be concluded. The question is: on what amount, for what timeframe and, what is most important, what will be the transit tariff. Ukraine wants it to be a 10-year contract with a transit volume of 60 billion cubic metres and with the highest possible transit tariff — higher than now.

    According to Sergei Pravosudov, the management of Gazprom believes that the transit price through Ukraine is already higher than all alternative routes:

    “As for the terms of the contract, the easiest option is to extend the existing contract for a year, and then decide which changes to make. Compromise is needed. I hope it will be found”, the Russian expert said.

    The Financial Times’ article was also commented by former Polish Deputy Industry Minister Jerzy Markowski.

    “In Europe, there are people who enjoy special pleasure in annoying Russia, while showing some strange bitterness, not even political, but something primitive. However, I see this as a deeper economic goal. Indeed, not a single pipeline is designed to be commissioned at full capacity from the very beginning. However, the recipient must also adapt to it. I remember how it was with Nord Stream 1. It lasted for a long time; it took as long as four years to ensure that the throughput was fully achieved, as well as the possibility of receiving gas by end consuming stations; that’s number one.

    Nord Stream 2 pipes
    © Sputnik / Alexey Vitvitsky
    Nord Stream 2 pipes

    Secondly, I believe that to a certain extent this is a calculation that if the deadline for the commissioning of the Nord Stream 2 is delayed, then during this period we will be able to receive more gas in Europe through the gas pipeline from Norway and Denmark. Its effectiveness, in turn, depends on the number of recipients, that is, on the amount of gas supplied in this way. You can see in this a political motivation, but in principle, it is a calculation that can be formulated as follows: ‘How can one make life hard for competitors?’” said the former deputy minister.

    Jerzy Markowski has no doubt that the Nord Stream 2 project will be implemented.

    “Nord Stream 2 will be built, that is obvious. It is possible that even after some time there will be a situation when other European countries will themselves seek to connect to Nord Stream 2, because it will turn out to be one of the most attractive routes promising the greatest benefits”, Jerzy Markovski concluded.

    According to the schedule, the construction of Nord Stream 2 should be completed by the end of 2019. At this time, the term of the previously concluded contracts for the supply and transit of Russian gas through the territory of Ukraine also expires. So from this point of view, the future is unclear. The issue of concluding a new contract is being discussed within the framework of trilateral meetings between Russia, Ukraine, and the European Commission.

    As Andrei Gerus, a representative of the president of Ukraine in the government, said on Monday in an interview with the news agency RBC Ukraine, that Kiev plans to resume talks with Moscow on the issue of transit and the purchase of Russian gas in the near future. Earlier, in late June, Gazprom CEO Alexei Miller said that Moscow was ready to extend the contracts concluded earlier, provided that they are feasible.

    The views expressed in this article are solely those of the speakers and do not necessarily reflect the official position of Sputnik.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.


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    Denmark, gas, Nord Stream 2, Russia, Poland, Europe
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