Russia is forced to build the South Stream pipeline as dealing with Ukraine as a transit country is becoming all but impossible as a result of Kiev’s obstructionist position.
Russia has called on Europe to be rational and realize that Ukraine should be deprived of its transit role for Russian gas supplies to Europe, Konstantin Simonov, Head of the National Energy Security Fund, said speaking at a roundtable on South Stream and Russia’s Energy Security.
The South Stream project is not an attempt to increase Europe’s dependence on Russian gas, Mr Simonov noted. In fact, quite the opposite is the case, as Russia is trying to demonstrate that it is ready to take on the responsibility of supplying Southern Europe with the required amount of gas based on existing contracts. South Stream will replace the gas transferred to Europe through Ukraine under these contracts. The only difference is that the transit fees that have until now been paid to Ukraine will go to Bulgaria and other countries, through which the gas pipeline will be built.
According to Mr Simonov, Russia is forced to build the pipeline as dealing with Ukraine as a transit country is becoming all but impossible as a result of Kiev’s obstructionist position. If Russia fills the Nord Stream pipeline to its capacity, this will help to decrease the gas transit volume through Ukraine to 41%, but it will not exclude the country from the transit process.
When Gazprom declared several years ago that South Stream was not intended to replace Ukraine as a major transit country for Russian gas supplies to Europe, it was already perceived by many as a clear sign that such a scenario was indeed being considered. Russia can’t afford to sit on a powder keg and was essentially forced to embark on this costly project as a result of Ukraine’s obstructionism. Using an existing pipeline would have been much cheaper than building a new one.
According to Mr Simonov, there is a risk that Ukraine will start using transit gas for its own needs as it did in 2009. Everyone understands that when Ukraine runs out of gas reserves this winter, it will have no other choice but to start stealing gas intended for Europe.
The idea of importing liquefied gas from a storage facility on the island of Krk in Croatia through the Adriatic Gas Corridor is unrealistic, as the volumes that can be imported through this project are not sufficient to cover Ukraine’s needs. The project also lacks the required production and capacity to serve as an alternative to Russian gas. The same is the case with proposals to fill the underground gas storage facilities in Ukraine with liquefied gas.
Under these circumstances, Mr Simonov said, countries in Southeastern Europe are essentially becoming hostages of Ukraine.
A separate issue, according to Mr Simonov, is the EU’s policy, which has been rather unfair recently. First, it appears that the EU is attempting to save the transit route through Ukraine while disregarding the interests of other countries, although even Austria has decided to resume its participation in South Stream. Second, the European Parliament often violates the very laws that it has adopted.
A vivid example of this is the acquisition by the State Oil Company of Azerbaijan (SOCAR) of the Greek gas transmission system operator DEFSA, which is in complete violation of the Third Energy Package, the very same package adopted by the EU to stimulate competition in European energy markets. If fairly applied, the package would have benefited Russia, as it makes possible direct sales to end consumers and does not require purchases of European equipment.
The expert also addressed a proposal that has been voiced frequently in Europe to shift the main gas transit route to Turkey. He does not support the idea and believes that Turkey is not a reliable partner.
“Turkey is certainly interested in alternative and more loyal suppliers, even if this would involve major delivery risks. In addition, Turkey will definitely use its transit role as political leverage,” Mr Simonov concluded.