The Russian South Stream gas pipeline project has been a thorn in Ukraine’s side. President, premier and energy-sector officials repeatedly argued that renovating the Ukrainian gas transit system would be less costly than building a new line along the Turkish coast. Meanwhile, Moscow constantly assured the world that the European Nabucco project had no future as it didn’t have a resource base, contrary to the South Stream.
It recently turned out that the almost infeasible, according to Moscow, project Nabucco got a se-cond wind. However, as the Hungarian ambassador to Ukraine Mihaly Bayer implied in his interview (The Day, No. 230, December 15, 2010), in fact all organizational and financial issues regarding Nabucco have been solved. Bayer knows the topic well. Before being appointed for the diplomatic job he worked as an ambassador on special missions and was the Hungarian foreign ministry’s person responsible for the Nabucco pipeline and energy security in Hungary.
A few days ago the head of the European Commission Jose Manuel Barroso and the Commissioner for Energy Guenther Oettinger visited Azerbaijan and Turkmenistan. They discussed questions of gas supplies for Nabucco with the heads of the states in the capitals of these countries. It seems that negotiations in Baku were successful, and ended with the signing of two important documents: the common declaration EU-Azerbaijan: Partnership for Modernization (which supports political and economic reforms in Azerbaijan), and declarations on creating the Southern Corridor.
The second document is actually a political support of Nabucco and the construction of a Trans-Caspian gas pipeline between Turkmenistan and Azerbaijan. This will enable getting over 30 billion cubic meters of gas annually from the Caspian basin in the near future.
The documents became a kind of response to Vladimir Putin, who recently stated in the Iranian newspaper Tehran Times: “Nabucco’s major problem is a lack of guaranteed volumes of raw materials and no source to fill this system [...] Russia will not deliver anything there, Iranian deposits are not explored, and Azerbaijan’s volumes are small. Moreover, Azerbaijan has signed a delivery contract with Russia.”
This statement completely contradicts what Azerbaijan’s President Ilham Aliyev said in an interview to our newspaper (The Day, No. 195, October 27, 2010): “I should point out that the confirmed gas deposits in Azerbaijan constitute two trillion cubic meters. And real deposits, as we call them based on the prognosis of our geologists — about five trillion cubic meters. We can increase gas production to 40 or even 50 billion cubic meters for a short time.”
Plans to build a new export gas pipeline prove that Azerbaijan has gas for export. Rashid Javanshir, president of the company BPР Azerbaijan, announced this at the end of last year. He assures that the new gas pipeline will be necessary to pump through an additional 16 billion cubic meters of gas. Its length will be 400 kilometers. At this he added that the total amount of gas exports, within the full-scale exploration of this big sea gas condensate deposit will constitute 24 billion cubic meters per year.
By the way, this gas pipeline will serve not only export of Azerbaijani gas but also to pump through some 40 billion cubic meters of Turkmen gas to Europe. Baku’s decision is quite clear, since the available Azerbaijani infrastructure is not designed for pumping through such big amounts, and in view of the demand increase for Azerbaijani gas in Greece, Italy, Bulgaria and other countries. Lately, Damascus and Baku signed a final agreement on technical details for purchasing Azerbaijani gas. Syria’s Deputy Oil Minister Hasan Zainab stated that already next year his country will start importing about 3.5 million cubic meters of gas per day (1.3 billion cubic meters per year) from Azerbaijan. Zainab points out that they expect to start importing in late 2011, after the completion of the building of a gas pipeline between Syria and Turkey, with the help of which the supplies will be realized.
But it is not just Nabucco that is problematic, but rather the Southern Energy Corridor. It includes three projects: Nabucco (Azerbaijan-Turkey-Austria), TGI (Turkey-Greece-Italy) and TAP (Trans-Adriatic Gas Pipeline). Thus one can observe a stable tendency of building gas pipelines for gas supply to Europe, and one shouldn’t be obsessed with the Russian South Stream alone.
It should be pointed out that the Nord Stream will be put into operation within the next few years and due to this the need of the northern part of Europe for transit through Ukraine will decrease. Nabucco will transport about 30 billion cubic meters of gas and this will lead to the real decrease of Russian gas being pumped through Ukraine. For some reason everyone is sure that after the crisis the use of gas in Europe will grow. So far this tendency is not observed. But one should note that before the crisis not all gas pipelines worked to their full capacity. Over 100 billion cubic meters of gas were pumped through our territory, and this could increase considerably. Already by 2015 pumping through Ukraine will fall. Italy expects a supply of considerable amounts of gas from North Africa, and a part of this gas will come to the European market. So far gas is produced in great amounts in Norway and England. One can add the increase of liquefied gas supplies to this. Already today one can predict a surplus of proposals on such a conservative and until recently passive market. Under such conditions some experts predict a drop in pumping through Ukrainian territory to 5-10 billion cubic meters of gas per year. Most likely this is an exaggeration, but the trajectory of demand and supply is rather stable. Thus, there is food for thought, and also for our oligarchs who still connect their welfare with gas.
As the English proverb goes, every cloud has a silver lining. The construction of Nabucco, for example, has not only negative consequences for Ukraine but also positive ones. The infrastructure of this gas pipeline in Romania will be located very close to our border. We have a real opportunity to think on how we can join it and by this easily diversify the sources of our gas supply. If we manage not only to speak about liquefied gas but supply it and build appropriate infrastructure, prices for natural gas will become more stable.
It’s high time to repudiate the myths we create. First of all the one about the unique transit nature of our country due to its geographical location. We will not touch all aspects of this complicated question, we will focus on the one under consideration — gas.
Some historians suppose that a shift of the main trade routes from the basins of the Dnipro and Volga to Genoa, Venetia and partly the Balkan peninsula was one of the reasons for the decline of Kyivan Rus’ — the transit character of the Kyivan state, reduced to a provincial import, with the respective consequences. Certainly, gas transit is not the only thing Ukraine gains from, but one cannot help considering this development of events. One should be ready for this.
In addition to solely economic and financial consequences of building a number of gas pipelines, there will be geopolitical ones. Above all, the decrease of Russia’s share in Europe energy supply will result in a decrease of its potential of expansionism. It’s important not to miss and make use of the possible prospects and this requires a wide panoramic view of the world and Ukraine. Will our government manage to transform the possible loss from Nabucco and other bypassing gas pipelines into positive opportunities for the country? We wish it were so...
