April 26, 2013 Leave a comment
Russia multiplies gas routes to Europe
By Vladimir Socor
Russian President Vladimir Putin and Gazprom are announcing colossal plans to expand the capacities of existing gas export pipelines and build new ones, all in Europe beyond Russia’s territory.
Gazprom already co-owns and controls export pipeline capacities amounting to some 110 billion cubic meters (bcm) per year in Europe beyond Russia (Nord Stream One and Two, Yamal-Europe, the export pipelines to the Baltic States and Finland, and Blue Stream), including more than 90 bcm per year in pipelines located within the European Union.
Apart from this, Russia remains the sole user (albeit at decreasing annual usage levels) of Ukraine’s state-owned pipeline
system with its westbound transit capacity of 140 bcm per year. Moscow now proposes to build new pipelines with capacities amounting to some 130 bcm per year (Nord Stream Three and Four, “Yamal-Europe Two”, South Stream), all within EU territory.
Thanks to the recently completed Nord Stream One and Two (2011–2012), Russia has some 250 bcm per year in export pipeline capacities at its disposal in Europe; and would increase that to a grand total of some 380 bcm per year, if the new projects are completed as proposed. Meanwhile, Gazprom’s current sales in Europe are down to some 150 bcm of gas annually in the framework of long-term supply commitments, with only scant hopes to regain Gazprom’s pre-crisis export levels of some 180 bcm annually in a post-crisis Europe. Moreover, Russia faces the prospect of a net loss of overall market share due to growing competition from liquefied gas on European markets.
Why, then, does Russia offer all those new export pipelines to Europe, at colossal capacities and costs? No fully satisfactory answers to this question appear to exist (Russian steel industry’s profiteering at state expense would be one such answer). But some grand policy objectives are clearly discernible behind the various pipeline proposals.