The Situation in the Ukraine. #30

Apostrophe (Ukraine): if Russia turns off the gas: how Ukraine does not slide into the Middle Ages
09/04/2021
Victor Avdeenko

Despite strong protests from Kiev, the scandalous Nord Stream 2 gas pipeline, which is supposed to supply gas bypassing Ukrainian territory, is likely to be completed and put into operation. Ukraine is trying to get guarantees of compensation for gas transit to Europe, which the Russians want to stop after the commissioning of Nord Stream 2, but the US and Germany cannot give them to us, and Putin's Russia does not want to. Ukraine did not receive specific information on this issue in Washington, where Volodymyr Zelenskyy met with Joe Biden on September 1. "Apostrophe" looked at what can be done to minimize the risks associated with "Putin's gas pipeline", including the threat to the country's energy security in the short and medium term.

Gas prices in Europe this summer are higher than ever. This is largely facilitated by Russia, which reduces fuel supplies to the EU countries, including via the Ukrainian route.

The actions of the Russian Federation, in principle, are understandable - thus, its leadership is pushing the European Union to the earliest possible commissioning of the Nord Stream 2 gas pipeline, through which gas will be supplied bypassing transit countries, including Ukraine. Say, the sooner it starts working, the faster the issues with the supply of fuel will be resolved and, accordingly, the prices will fall.

There was no doubt even earlier that this is pure blackmail, but recent events on the European gas market have dispelled the last of them.

Thus, on August 18, due to erroneous information that physical gas supplies via Nord Stream 2 had already begun, prices at European hubs instantly collapsed by 10%.

Quotes quickly bounced back up. But the next day, more correct information appeared - the Russian "Gazprom" announced that supplies through the gas pipeline would begin by the end of 2021.

And again, prices collapsed, breaking through the $ 500 per thousand cubic meter mark, above which they had been holding for some time.

Thus, it can be stated with confidence that today the European gas market is entirely dependent on the scandalous Russian gas pipeline. That, in fact, was what the Kremlin was trying to achieve.

At the same time, after it became clear that there is no gas in Nord Stream-2 (besides, it has not been completed yet, and licensing of its activities will also take some time), prices at hubs increased again - albeit not to the highs recorded in early August.

Ukraine in the grip of geopolitics

As you know, Nord Stream 2 is being promoted not only by Russia, but also by Germany. Berlin does not tire of repeating that this is a purely commercial project that has nothing to do with politics (while not only in Ukraine, but also, for example, in Poland, they are convinced of the opposite). This is understandable - the gas pipeline will exclude transit countries from Russian gas supplies (in the case of Germany, it is rather not even Ukraine, but Poland and Belarus), and Germany itself will become one of the largest gas hubs in Europe thanks to the overland extensions of the Nord Stream and Nord Stream 2 - OPAL, NEL and EUGAL.

At the same time, EU directives are in force in Germany, according to which one and the same company cannot simultaneously produce gas and transport it across the EU. In order to preserve fair competition, the transit company, and in the case of Nord Stream 2, this is Gazprom, must provide half of its capacity to other suppliers.

The Russians are trying with all their might to withdraw Nord Stream 2 from the effect of these directives, but on August 25 the Supreme Land Court of Dusseldorf (Germany) decided that there was no reason for this.

Such a decision may postpone the date for putting the gas pipeline into operation, but is unlikely to put an end to the project itself.

In addition, the Kremlin is looking for ways to circumvent European rules for gas supplies. And, it seems, they have already "groped" one of them. Recently it became known about a letter from the head of the state company "Rosneft" Igor Sechin to the President of the Russian Federation Vladimir Putin, in which "the real Igor Ivanovich" (the "fake" meant Igor Ivanovich Shuvalov, who headed the government apparatus in the 2000s) asks Vladimir Vladimirovich to allow " Rosneft "to export gas to Europe under an agency agreement with Gazprom (Gazprom has a monopoly on the transportation of exported gas, while the export itself can be carried out by different companies -" Apostrophe ").

In his letter to Putin, Sechin does not say exactly which route Rosneft wants to supply its gas, but notes that these supplies "will help lift restrictions on the part of EU antimonopoly legislation regarding the permissible loading of the Nord Stream 1 and Nord stream-2 ", as well as OPAL" (citing the text of the Russian newspaper Kommersant, which refers to the letter in question).

If such an agreement is signed between Rosneft and Gazprom, the latter will formally fulfill the EU directive. It is another matter how they will look at it in the controlling bodies of the European Union, given that we are talking about two Russian state energy monopolists.

In July, the United States and Germany reached an agreement on Nord Stream 2, with the result that Washington decided not to hinder the completion and commissioning of the gas pipeline.

For the current American President Joe Biden, the deal with German Chancellor Angela Merkel was badly needed, above all in order to revive the friendly relations between the United States and the EU, which his predecessor Donald Trump had badly spoiled, and this is especially important in light of the expected confrontation between America and China. Biden's flirtations with Russia are also connected with this - the current American administration still has a glimmer of hope that Moscow will not go on to further rapprochement with Beijing and will not side with the latter in its confrontation with Washington.

In this big geopolitical game, Kiev turned out to be a bargaining chip, although the United States and the European Union (in fact, Germany) are trying to save face by promising our country protection from Russia if Moscow "uses energy as a weapon or takes aggressive actions against Ukraine. "(quote from US Deputy Secretary of State Victoria Nuland).

But this is too vague a wording that does not give an idea of ​​how our Western partners intend to protect us.

Who will give guarantees

Ukraine, however, needs guarantees of maintaining energy security, in particular, the continuation of gas transit through our territory after 2024, when the current contract with the Russian Federation expires. Our country wants to receive such guarantees from Germany and the USA.

"I want to understand what Ukraine will receive and what our state can lose after the transit agreement ends in 2024, and who gives specific guarantees to Ukraine," Ukrainian President Volodymyr Zelenskyy said during a joint briefing with Angela Merkel on August 22 in Kiev. According to him, "more specific things" on this topic were to be discussed at the talks between the Minister of Energy of Ukraine Herman Galushchenko with the Minister of Economy and Energy of Germany Peter Altmeier and the US Secretary of Energy Jennifer Granholm, which took place the next day, August 23, on the sidelines of the summit. " Crimean platform ".

However, where the parties came (and whether they came) is unknown. It is quite possible that so far nothing concrete. At least on August 26, on a television broadcast, Sergei Makogon, General Director of GTS Operator of Ukraine LLC, noted that so far there are no guarantees of continued transit, and negotiations with the United States and Germany continue: “We believe that the most significant guarantee is the renewal or continuation of the existing treaty now, without waiting for 2025, for the next 15 years. "

But the fact is that only Russia can give such guarantees to Ukraine. And she is not going to do this. After negotiations with Angela Merkel, who was in Moscow on the eve of her visit to Kiev, Vladimir Putin said that transit through Ukraine would be carried out if necessary.

Ukraine, however, has specific proposals to continue transit through our territory. They were presented by the head of NJSC "Naftogaz of Ukraine" Yuriy Vitrenko.

"The most realistic guarantee of maintaining transit through Ukraine is:

- relocation of gas transmission points in existing Gazprom contracts, according to which gas is now supplied to Europe through Ukraine, to the Russian-Ukrainian border, so that European companies themselves order gas transit through Ukraine until 2035;

- creation on the electronic platform of Gazprom Export (a subsidiary of Gazprom that exports gas) a point for the supply of additional gas volumes at the border of the Russian Federation-Ukraine; again, so that European buyers of this gas can themselves order gas transit through Ukraine;

- unblocking access to the Ukrainian gas transportation system from the Russian Federation for other gas exporters to Europe, in particular from Central Asia, "Vitrenko wrote on Facebook.

At the same time, according to him, this is not a whim of Ukraine, but the fulfillment of the European rules of the gas market: "If Russia does not want to play by European rules, then Nord Stream 2 should never work."

True, we do not yet know Russia's position on this matter, as well as the opinion of our European, in particular, German partners.

The fate of the Ukrainian route

At the same time, hysteria has recently been unleashed in the Russian media about the allegedly insufficient gas reserves in Ukrainian underground storage facilities. The current volumes are compared with last year, and they are indeed more modest. Recall that by the beginning of the 2020-2021 heating season, the Ukrainian underground storage facilities had more than 28 billion cubic meters of fuel, which became a record for the last ten years. The coronavirus has played a role in this, having collapsed the demand for gas in Europe and, as a result, prices for it.

Not surprisingly, stocks are one third lower this summer than they were a year ago. As of early August, the storage facilities contained over 17 billion cubic meters of gas, which is in line with the government's plan. At the same time, NJSC Naftogaz of Ukraine plans to pump about 3 billion cubic meters of gas into the UGS before the start of the heating season. And this volume, in theory, should be enough for our country for the normal passage of the autumn-winter period.

As for the alarmism of the propaganda media in Russia, here, in principle, everything is clear: having declared about the shortage of fuel in Ukrainian storage facilities, it is easy to return to the beloved mantra that "Ukraine is tying gas", and from it it is even easier to lead to the idea of ​​what exactly our country will do this when in winter we will not have our own fuel, and therefore transit through the Ukrainian territory will become risky.

However, transit through our country will continue in the next three years, at least Gazprom is obliged to pay for the transportation of at least 40 billion cubic meters of gas per year (from the beginning of 2021 to the end of 2024), regardless of the actual volume of pumping. So, for example, it was in 2020, when the Russian monopoly transported only 55.8 billion cubic meters of gas through our country instead of the 65 billion cubic meters established by the contract, while still paying for the contract volumes.

But what will happen after that is complete uncertainty.

"In fact, the demand for natural gas in Europe will determine the degree of demand for the Ukrainian route. Therefore, it is possible that from 2025 Russia will not have a critical need to use our gas transportation route," programs of the Ukrainian Institute of the Future Andrian Prokip.

At the same time, according to him, much will depend on the factor of competition between various transit routes.

"The Ukrainian route can compete if there is gas transmission at the eastern border of Ukraine (now the transfer point is the western border, and the head of Naftogaz, Yuriy Vitrenko, Apostrophe also speaks about this), because then, for example, Slovakia and Italy will be able to choose a more profitable route, and for them it is through Ukraine, and thus create a demand for our route, - the expert explained. - Therefore, there is a high probability that transit will continue. What will be its volumes, and whether they will satisfy Ukraine, is a difficult question ".

Ukraine's energy security is under threat

However, not only state revenues, but also, in fact, fuel supplies to our country depend on the volumes of transit along our route. After all, it is no secret that a significant part of gas imports to Ukraine is carried out according to the so-called "virtual reverse" (Russian gas purchased by European traders does not cross the western border of Ukraine), and therefore, if the Russian Federation stops transporting fuel through our territory, or significantly reduces volumes transit, the country may face a gas shortage.

But the authorities do not voice any specific ways of solving this problem.

“Officially, no one says anything, officials unofficially say that everything is OK, but many specialists have questions, is everything really OK?” Andrian Prokip noted.

According to the expert, in principle, Ukraine could resume the purchase of gas from Russia, which was stopped in November 2015 (especially since the decision of the Stockholm Arbitration, theoretically, opens such an opportunity for Kiev), "but only if then the twisting of hands does not begin and blackmail. "

And this, given past experience, is hard to believe.

The problem could be solved by a significant increase in domestic gas production. Moreover, in 2016, at the government level, ambitious plans for increasing production were approved, according to which in 2020 we had to reach the figure of 27.6 billion cubic meters while reducing consumption to the same level through the introduction of energy efficiency programs. But, unfortunately, nothing came of this idea: last year gas production did not even reach 20 billion cubic meters (19.74 billion cubic meters), and fuel consumption in 2020 amounted to 29.84 billion cubic meters.

Last March, Prime Minister Denis Shmygal outlined a new deadline for the country's access to full gas supply from its own production - 2025 (the head of government did not name the actual production volume). This term is quite understandable - it is in 2025 that the transit contract with the Russian Federation will end, and there will be a threat of a fuel shortage in the country, as mentioned above. But there are no additional prerequisites for increasing production now - compared to 2016 - and therefore one should not seriously count on progress in this matter.

It would also be possible to count on a reduction in gas consumption in the country due to energy conservation (which, judging by the above figures, did not happen), however, not everything is so simple here either.

"The role of energy conservation is very important if it does not lead to a decrease in the level of well-being of Ukrainian citizens," said Gennady Ryabtsev, head of special projects at the Psyche scientific and technical center, in a commentary. now they impose a huge number of tasks that turn Ukraine into something medieval. "

What then needs to be done to minimize the risks described above?

To begin with, we should, as they say, "rethink" the domestic gas transportation system (GTS), says Andrian Prokip. He recalled that the Ukrainian "pipe" is designed for significantly larger volumes of fuel transportation than the current ones (the GTS is used not only for transit, but also for delivering gas to domestic consumers - "Apostrophe").

"The system needs to be rethought and rebuilt. It can be rebuilt to meet new needs, for example, gas-hydrogen mixtures. But it is clear that it will cost a lot of money. Therefore, the main question is how much it will cost and who will pay for it," he said ...

Recently, much has been said about the possibilities of using our GTS for transporting "green" hydrogen to Europe, which, in theory, will be produced in Ukraine, but this is, nevertheless, a rather distant prospect. In addition, it is still not clear for what means to modernize the "pipe" for these purposes - Ukraine does not have that kind of money, and whether the EU is ready to invest in such a project is unknown.

Time for action, not talking

"Green" hydrogen certainly has great prospects, and Ukraine should participate in projects for its production and transportation. But it is no less important now to take measures to minimize the threats associated with Nord Stream 2. And such measures should be taken not by the United States and Germany, but by the government of Ukraine.

"This does not depend on external factors, and, unfortunately, our elites cannot understand (or pretend not to understand) this," said Gennady Ryabtsev.

He recalled that an energy security strategy has been developed in Ukraine, which defines strategic goals and objectives: "These tasks need to be simply implemented - they are quite realistic from the point of view of a resource. It is time to move from a constant revision of existing program documents to their careful implementation."

According to Ryabtsev, the first thing to do is to determine how much gas our country needs now and how much it will need in the coming years. After that, you need to understand what kind of internal resources the country has - how much we can increase production, and really provide ourselves with fuel for our own production, and how much time and money will be required for this.

“If it turns out that we do not have enough internal resources to provide ourselves with gas, we need to determine where we can get the missing gas from - who can be a supplier, and whether these suppliers have gas for the future. prevent the increase in production and imports, that is, to determine the list of threats that need to be neutralized. Actually, this is enough to start acting, "summed up Gennady Ryabtsev.

ALAMO wrote:Maybe he suggested something

VARGR198 wrote:Meanwhile #Kharkov, #Ukraine:  Another epic win for #Euromaidan colonial administration, from mass murder to book burning.  Medical school books in Russian language are stacked to be burned.  I would love to check out the quality of new medical books in UA farmer cockney dialect.

...What signal does that send?