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Analysts: ending Russian gas transit through Ukraine by 2020 is realistic

March 25, 2015, 16:59 UTC+3 Alexandrova Lyudmila
© Valery Sharifulin/TASS

MOSCOW, March 25. /TASS/. Curtailing Russian gas transit to Europe through Ukraine by 2020 looks like a realistic task, Russian experts say, adding that Europe-bound gas export will be inevitably shrinking due to the current EU policies, while eastward traffic will keep growing. In any case, neither the West nor the East will be able to do without Russian gas altogether.

At present there are two major routes bypassing Ukraine that Russia uses to export natural gas - Nord Stream laid under the Baltic Sea to Europe and the Blue Stream going to Turkey. Instead of the South Stream gas pipeline project, disrupted through the EU’s fault, Moscow has proposed an alternative Turkish Stream that would let Europeans receive Russian gas through a hub on Turkey’s border with Greece. However, the talks with Turkey have been slow-going, as Ankara would like to get major discounts off the price of gas. Besides, Europe is not very happy about these plans and it is not ruled out it may try to disrupt this project, too.

Europe has declared its firm intention to ease its dependence on Russian gas.

Infographics Russia's gas pipelines to Europe by 2018 Russia's gas pipelines to Europe by 2018

Russia's gas giant Gazprom intends to completely abandon gas supplies to Europe through Ukraine after 2018 with the help of a new pipeline to Turkey. Infographics by TASS

In a situation like this Russia plans to step up gas export to China and to the Asia-Pacific countries via two pipelines - Altai and Power of Siberia. Their first units are to go operational by the end of 2018.

The task of terminating gas transit through Ukraine has been identified, but it can be addressed in various ways, and far from everything depends on Russia, research fellow at the RAS Centre of World Energy Markets Studies, Svetlana Melnikova, has told TASS. "We are unable to employ all Nord Stream branches to the full extent due to the operation of the third energy package. In the meantime, this is a real potential for expanding gas traffic. Naturally, Moscow is nervous about that."

Besides, as Melnikova said, Europe’s gas market has been shrinking dramatically. Over the past five years demand has fallen by 100 billion cubic meters. "The Europeans are doing their utmost to minimize the consumption of gas, as a matter of fact, Russian gas. If this trend continues, by 2020 we shall see a further decline, which will reduce the demand for Ukrainian transit to the minimum, if not to zero."

Last year more than 60 billion cubic meters of gas was transited through Ukraine, Melnikova recalls. If Nord Stream is employed to capacity and if the Blue Stream to Turkey is expanded, they will be able to pump through about 20 billion cubic meters. There remains about 40 billion. If the demand for Russian gas on the European market remains on the decline, the role of Ukrainian transit may be minimized.

It is too early to say what the Turkish Stream affair may eventually end in, because many aspects of it remain highly uncertain.

As for the possibility of stepping up Russian gas supplies to China and other countries in Asia and the Pacific, it looks quite realistic and economically reasonable. They fit in well with the logic of forming the Eurasian gas market, where Russia is the key player," Melnikova remarked.

"At this point it is hard to say whether east-bound export will compensate for the likely losses in the Wet, because the markets of gas, including those in the Asia-Pacific Region, are undergoing fast transformations, so making long-term forecasts is a rather daunting task. One thing is pretty clear, though: it is worth turning east. But since the Western and eastern markets experience energy shortages, the demand for Russian gas will remain high. It remains to be seen what happens to prices, though."

Assistant lecturer at the presidential academy RANEPA, Ivan Kapitonov, has said the termination of gas transit through Ukraine is more than likely. Firstly, because the Turkish Stream pipeline will be available by then, which he sees as a very realistic project. "The odds are it will be laid rather than not," Kapitonov told TASS.

He sees the eastern routes of Russian gas export as very promising, although the Chinese, he warns, are very tough partners to deal with.

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