Russia’s Gazprom Says Will End Gas Transits Through Ukraine

The Russian energy conglomerate urges its European customers to link up with a new Turkish pipeline.

Gazprom offices in Moscow, Russia, June 10, 2010
Gazprom offices in Moscow, Russia, June 10, 2010 (Albert Alien)

Russia’s energy monopoly Gazprom announced on Wednesday it would stop transiting natural gas through Ukraine and urged its European customers to link up with a future pipeline to be built in Turkey or lose access to supplies.

The announcement came from Gazprom chief Alexei Miller during a visit to Moscow by European energy commissioner Maroš Šefčovič. The Slovak diplomat said he was “very surprised” by the statement.

Miller’s veiled threat came less than two months after Russia canceled the South Stream pipeline which was supposed to pump Russian gas to Bulgaria’s Black Sea port of Varna before extending overland through Serbia, Hungary and Slovenia.

The $40 billion project fell victim to the European-Russian trade war that started earlier in 2014 when Russia occupied and annexed Ukraine’s Crimean Peninsula. The European Union and the United States responded by imposing economic and financial sanctions on Russia.

Russia’s president, Vladimir Putin, announced in December the country would boost energy sales to Turkey and expand gas transits through that country instead.

Gazprom’s Miller said on Wednesday the Turkish route was the only one through which “63 billion cubic metres of Russian gas can be supplied, which at present transit Ukraine.” He warned Šefčovič the European Union should start building the necessary connecting infrastructure on the Greek border. “Otherwise, these volumes of gas could end up in other markets,” he said.

That looks unlikely. Despite an energy deal Russia did with China last year, it still sells the bulk of its gas to Europe and most of its export infrastructure is pointed westward. Russia lacks the infrastructure to change customers as quickly as Miller suggested it could.

Similarly, the countries in the European Union are dependent on Russia. The bloc as a whole gets roughly a quarter of its gas from Russia but some of the new member states in Russia’s former sphere of influence have almost no other suppliers.

In the wake of the Crimean crisis, leaders asked the European Commission to draft proposals for reducing the bloc’s dependence on Russian gas. Options include raising storage capacity — which European countries have already done since Russia twice shut gas transfers to Ukraine in 2006 and 2009, leaving other countries in the cold — and building more interconnectors to enable gas that is imported from Norway, Qatar or even the United States to flow the other way, something that could stop Russia from blackmailing former satellite states in Eastern Europe.

Russia’s aims are entirely political. The South Stream pipeline never made economic sense. It is believed Russia uses just 60 percent of its pipeline capacity. The only reason for building another pipeline was to bypass Ukraine, a former Soviet republic Russia tried to lure into a customs union but that has instead deepened its relations with the West.

Late last year, Ukraine entered into an agreement with Russia for the future supply of natural gas which committed the former to prepay for deliveries. A month later, Russia suspended its coal delivers to Ukraine.

Russia had cut off gas supplies during the summer when it stepped up its support for the pro-Russian separatists fighting for independence in Ukraine’s southeastern Donbas region. Russia continues to deny it actively backs the insurrection but seems determined anyway to cause an energy crisis for the government in Kiev.

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