Gas crisis focuses minds on new routes
Published: 09 January, 2009, 22:08
Edited: 14 January, 2010, 22:27
TAGS: Investment, Natural resources, Economy, Gas
As Europe waits for gas supplies to resume, support is growing among leaders to find alternative transit routes. Gazprom says it’s ready to accelerate the construction of proposed Nord and South Stream pipelines.
Industry insiders say the main lesson of the latest gas dispute may be that reliability of supply comes from diversification.
Russia is now backing three pipeline projects to pump gas directly to Europe, bypassing Ukraine: Nord Stream running under the Baltic Sea; South Stream via the Black Sea; and the second branch of Blue Stream going through Turkey.
Nord Stream, a joint venture with Germany, may be the first to be built.
Former German Chancellor and head of Nord Stream’s shareholders’ committee, Gerhard Schroeder, said at a meeting with PM Putin: “All EU member states consented to the Nord Stream project.”
He added that “the obligation of each country now is to support it. If all countries follow the agreement, the Nord Stream natural gas pipeline will be commissioned in October 2010.”
Analysts say many EU countries fear that although the new pipelines will allow Russian gas to bypass Ukraine, they will give Russia even greater control over supplies to Europe.
Head of research at Alfa Bank, Ron Smith, says some EU states “have been hesitating, saying that Nord Stream will make Europe even more dependent on Russian gas.”
However, Smith said, they “don’t have much of a choice. There are only a few sources of gas: Europe itself, Norway, North Africa and Russia,”
If the gas dispute between Ukraine and Russia continues it may give greater momentum to another project – the EU-backed Nabucco pipeline, planned to run from Turkey to Austria, bypassing Russia.
Ukraine gas dispute moves into post cutoff stageNaftogas of Ukraine and Gazprom have moved to contingency plans after supplies to Ukraine were shut off following the failure to reach an agreement on a 2009 contract. |
Markets open in Moscow after long holidayAfter a ten-day holiday, Russian markets have opened with solid gains including a rise in Gazprom. It's the first day of trading since the markets closed for the New Year holidays. |












It is not accurate that the problems of transit accross Ukraine are giving momentum to Nabucco project. Just the opposite is true. It has given momentum to Nord Stream and South Stream. The reason is simple. Both these projected pipelines are sourced with gas, as Russia has by far more reserves, while current demand slows. The problems with transit over Ukraine was political, and political capital has been attempted to be raised from that event to bolster Nabucco. Granted, all the positive noises were made at the time, but Nabucco does not have the sources of gas. The speculation over Turkmenistan has pewtered out, as it became clear that Turkmenistan intends to honor agreement with Russia through 2028, and the new reserves have been committed to giant Turkmenistan-Uzbekistan-Kazahstan-China pipeline. The pipeline, that has just been commissioned, speaks for itself. Additional branch has been opened to Iran. And to insure that Turkmenistan can meet its obligations, the existing fields within country will be networked, curtesy of Russa's financing. This will insure that various fields can supply China, Russia or Iran, as they can reroute the gas as needed. South Stream will get one of its branches from Greece to Italy, and will likely be done sooner. Bulgaria will become by far less important in this schema, and the longer the "rethinking" lasts, the less valuable the country will be. After all, the northern branch to Serbia and Hungary can come accross Macedonia. South Stream, even if only Turkey-Greece-Italy trunk is built, brings gas to Europe. The only hope for Nabucco is Iran's gas. And for that, a major accommodation of Iran will have to be found. Othewise, the Turkmenistan-Iran trunk can also work in the reverse, go from Iran to Turkmenistan, and from there supply vast Asian market. Gas needs will rise, as many countries convert from oil to gas. This is just a matter of time.