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Nord Stream 2. Is it possible to turn a threat into a chance?

17 July 20174044
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If we assume that Gazprom will manage to convince the EU of the Nord Stream 2 project expediency, according to experts, the share of Russian gas can increase up to 60% in the German market, which already poses a threat for the basic rules of the diversification of supplies.

This is stated in the study of the DiXi Group Think Tank "Nord Stream 2. Is it possible to turn a threat into a chance?".

According to analysts, in the absence of any branches of pipelines along the Baltic Sea, an accident at one of them would mean a 25% reduction in deliveries, and 15% in Gazprom's export structure (based on the results of 2016). In fact, this is contrary to the policy of diversification: firstly, the source of supply is the same, and only direction changes, and secondly, new risks arise for the energy stability.

One of Gazprom's arguments in favor of the implementation of the Nord Stream 2 project is the cost of transit. Nevertheless, according to expert estimates, the cost of transporting Russian gas through a new gas pipeline may be higher than the Ukrainian route after 2020. If Gazprom's commitments to the Slovak gas transportation operator until 2029 remain valid, and Ukrainian tariffs do not exceed the Nord Stream tariffs, it will be more profitable to transport gas through the Ukrainian gas transportation system. However, this requires Naftogaz to fulfill its promise and reduce entrance/exit tariffs for the Ukrainian GTS in 2020 in comparison with the current tariffs.

But if there is a significant reduction in the transit of Russian natural gas via Ukrainian gas mains to Europe, it would question, in its turn, the maintenance of significant capacities of the Ukrainian GTS. That is, the agenda will include such issues as dismantling and preserving unnecessary capacities or entire gas pipelines, as well as reducing the staff of the network operator. Whether the EU will be ready to finance the Ukrainian transit route to launch it immediately in the event of any interruption in Russian gas supplies via offshore gas pipeline, and only for the sake of launching another pipe from the same source of supply is a question for the EU taxpayers.

The study can be downloaded here.

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