Final approval of the “Nord stream-2”: consequences for Ukraine


 Финальное одобрение «Северного потока-2»: последствия для Украины

Last week, the German company Gascade Gastransport GmbH have agreed with the Federal German authorities permits for the construction of the pipeline EUGAL. The value for Ukraine is crucial. This at first glance European project – land component of the “Nord stream-2” in Germany.

If to put outside the brackets “European” EUGAL, the situation is as follows: the Russian monopolist “Gazprom”, which owns a share in Gascade received the last approval for the construction of its pipeline system to Europe. The pipe through which Russia intends to abandon the Ukrainian transit system.

Tell the details of the transaction EUGAL and assess the possible consequences for our country.

Details of gas transportation project EUGAL

Permission to lay EUGAL became the last in the chain of approvals throughout the energy project “Nord stream-2” (“SP-2”). 25 Oct German operator Gascade Gastransport GmbH, which co-owners are Gazprom and BASF/Wintershall, announced the details of the solution:

“The regulator Stralsund issued a permit for the construction of EUGAL on the territory of Mecklenburg – Vorpommern. This solution integrates all the separate approval required for the pipeline construction in this area. Construction EUGAL fully approved”

press release Gascade Gastransport GmbH

EUGAL – European gas pipeline European Gas Pipeline Link – is a continuation of the “Nord stream-2” land on the territory of Federal States of Germany. Construction EUGAL necessary for the delivery of gas from the “SP-2” to the German-Czech border.

Mecklenburg – Vorpommern – third after Brandenburg and Saxony land of Germany, which had to approve the land laying pipe “Gazprom”. He “Nord stream-2” as it is known, runs along the bottom of the Baltic sea.

Highway EUGAL will be two thread pipes. Its duration will be 485 km, with a throughput capacity of 51 billion m3/year. The project is estimated at 1 to 3 billion euros. Completion is scheduled by the end of 2020.

It is known that this project was joined by three German gas transmission companies: Fluxys Deutschland GmbH, Gasunie Deutschland Transport Services GmbH and ONTRAS Gastransport GmbH. In total, the construction of “Nord stream-2” has already involved 8 European energy operators: Shell, OMV, Engie, Uniper, BASF-Wintershall and three attached.

Why EUGAL – bad news for Ukraine

The company Gascade shall perform such of the information policy under which the construction of EUGAL – a purely European project of development of gas transportation infrastructure of the EU and it serves the growing needs of Europeans in energy:

“Our task is to engage in the transportation of gas, including, apparently, that will come on the “Nord stream-2″, but not only. We constructed a pipeline that can transport gas from various sources, and in all directions, because it will be integrated into the existing pipeline infrastructure”

guide EUGAL

Thus, the top management of the project is positioning itself as an independent and “protected” the energy legislation of the European Union, according to which the monopoly on the supply of energy is not allowed. This direct connection with the Russian state company in Gascade silent.

“Nuance” of the project is that without implementing the whole concept of the “Nord stream-2” is reduced to zero, as the pipe under the Baltic sea ends at the coast of Greifswald, Germany. Without a continuation of the pipeline on land, the fuel supply through this route to Europe is impossible.

This “EU-centric” approach helps owners Gascade, including the aforementioned “Gazprom”, not to focus on political motives for the construction of “Nord stream-2”. And not to draw attention to the fact that EUGAL is the terrestrial part of a new route of deliveries of blue fuel from Russia to the EU bypassing Ukraine.

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Final approval of Gazprom’s pipeline on the territory of Europe – of course, great news for Russia. Formal obstacles for the laying of more no. And as reported in the Gascade, the work will be carried out on several sections of the route simultaneously to speed up the process of completion.

For Ukraine, this news is not the best. In 2019 expiring 10-year contract between Kiev and Moscow about the exploitation of transit routes of the Ukrainian gas transportation system. As you know, Gazprom is looking for ways not to renew this contract and at the same time not to lose the European consumer.

To resolve the issue of gas supplies to the EU Russia is going through the construction of “Nord stream-2”, which was recognized as a political project of the Kremlin. And in Ukraine – one of the key fiscal risks for the country. As DW says, the overall situation is as follows:

“Purely Gazprom’s gas pipeline “Nord stream-2” and formal public EUGAL gas pipeline, which Gazprom is, however, already have booked in on an open auction, can replace up to 55 billion cubic meters of Ukrainian transit. Its volume reached a record for the Russian gas exporter 2017 of 93.5 billion cubic meters a year earlier, they amounted to 82 billion cubic meters. m. Another part of the transit through Ukraine in the amount of 31.5 billion cubic meters will be able to replace two lines of the “Turkish stream”, each 15.75 billion cubic meters And “Nord stream-2”, and “Turkish stream” “Gazprom” aspires to be commissioned before the end of 2019. The reason for this synchronicity of two mega-projects is easy to guess: just in time for this deadline expires a ten-year gas contract with Ukraine”

— DW

The end user of gas through the pipe EUGAL is not Germany, and the Czech Republic and Austria. Moreover, the consumption of the Czech Republic is such that it will also serve as a transit country to Austria, Central European gas distribution hub in Baumgarten. Through this major distribution center are the supply of Russian gas to Western Europe. At the moment the feed to the Austrian Baumgarten passes through Ukraine.


 Финальное одобрение «Северного потока-2»: последствия для Украины

The consequences for Ukraine

Experts believe that Russia’s goal remains unchanged – to cut off Ukraine from the transit through its territory. 55 billion cubic meters per year – something that can take on the “Nord stream-2” and 51 billion cubic meters of them by EUGAL.

Gazprom’s project is expensive and not effective, say analysts. But for European members carries minimal risks and even benefits. Long term rentals “Gazprom” gas transportation routes to Europe means paying capacity of the pipeline even if gas it will be. Therefore, the project as a whole attractive to Europeans.

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As for Ukraine, the risks are clear. Minus 2.5-3% of GDP due to the decline in exports of services in case of reduction of deliveries of blue fuel in the Kremlin’s decision after the expiry of the contract with “Gazprom”. It would weaken our country not only economically but also politically.

Europe and Germany in particular, insist that Russia guaranteed the extension of the transit agreement with Ukraine. And the head of the Kremlin Vladimir Putin publicly it promises. But to take on faith the words of Putin, especially with regard to Ukraine is to put it mildly, naive and reckless.

Besides in Germany is politically not easy. Chancellor Angela Merkel, who is able to speak with and to convince Putin, is losing its support and has stated desire to leave politics in 2021. How loyal to Ukraine will be the new leader of the German nation hard to judge.

It is well known that by the end of 2019 fully “Nord stream-2” and the land component of EUGAL is not complete. At least 1-1,5 years you need to finish the project as scheduled. But all these factors do not solve the problem of gas transit to Ukraine, but only delay its effects.

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