Posts
Correction
Yesterday
I reproduced this article from the Daily Mail
This
was based on an alert from Zero Hedge, based,partially on the Daily
Mail article
Russia Cuts Off Ukraine Gas Supply To 6 European Countries
It
turns out that the Daily Mail article dates from a previous episode a
few years ago and Zero Hedge failed to pick this up.
In
the meantime the story has circulated around the Net, including on
this blog.
I
apologise for inadvertantly misleading people.
The
real story, carried by Bloomberg is as follows.
--Seemorerocks
Russia
to Shift Ukraine Gas Transit to Turkey as EU Cries Foul
15
January, 2015
Russia
plans to shift all its natural gas flows crossing Ukraine to a route
via Turkey, a surprise move that the European Union’s energy chief
said would hurt its reputation as a supplier.
The
decision makes no economic sense, Maros Sefcovic, the European
Commission’s vice president for energy union, told reporters today
after talks with Russian government officials and the head of gas
exporter, OAO Gazprom (GAZP), in Moscow.
Gazprom,
the world’s biggest natural gas supplier, plans to send 63 billion
cubic meters through a proposed link under the Black Sea to Turkey,
fully replacing shipments via Ukraine, Chief Executive Officer Alexey
Miller said during the discussions. About 40 percent of Russia’s
gas exports to Europe and Turkey travel through Ukraine’s
Soviet-era network.
Russian
Gas
Russia,
which supplies about 30 percent of Europe’s gas, dropped a planned
link through Bulgaria bypassing Ukraine amid EU opposition last year.
Russia’s relations with the EU have reached a post-Cold War low
over President Vladimir Putin’s support for separatists in Ukraine.
Sefcovic
said he was “very surprised” by Miller’s comment, adding that
relying on a Turkish route, without Ukraine, won’t fit with the
EU’s gas system.
Gazprom
plans to deliver the fuel to Turkey’s border with Greece and “it’s
up to the EU to decide what to do” with it further, according to
Sefcovic.
Different
Habits
“We
don’t work like this,” he said. “The trading system and trading
habits -- how we do it today -- are different.”
Sefcovic
said he arrived in the Russian capital to discuss supplies to
south-eastern EU countries after Putin scrapped the proposed $45
billion South Stream pipeline. The region, even if Turkey is
included, doesn’t need the volumes Gazprom is planning for a new
link, he said.
Ukraine
makes sense as a transit country given its location in Europe and the
“very clear specified places of deliveries” in Gazprom’s
current long-term contracts with EU customers, Sefcovic said.
“I
believe we can find a better solution,” Sefcovic said.
The
28-nation EU is planning build an energy union to reduce dependence
on Russia and facilitate transition to a low-carbon economy. Russia
was planning South Stream for about a decade, first claiming it would
meet expanding demand in the EU, then saying would ensure supplies
from high transit risks via Ukraine.
‘No
Options’
Gazprom
has reduced deliveries via Ukraine after price and debt disputes with
the neighboring country that twice in the past decade disrupted
supplies to the EU during freezing weather.
After
building and acquiring export pipelines, the company cut transit via
Ukraine to about 62 billion cubic meters last year from 137 billion
in 2004.
“Transit
risks for European consumers on the territory of Ukraine remain,”
Miller said in an e-mailed statement. “There are no other options”
except for the planned Turkish Stream link, he said.
“We
have informed our European partners, and now it is up to them to put
in place the necessary infrastructure starting from the Turkish-Greek
border,” Miller said.
Russia
won’t hurt its image with a shift to Turkey because it has always
been a reliable gas supplier and never violated its obligations,
Russian Energy Minister Alexander Novak told reporters today in
Moscow after meeting Sefcovic.
“The
decision has been made,” Novak said. “We are diversifying and
eliminating the risks of unreliable countries that caused problems in
past years, including for European consumers.”
The real story -
2. Force Russia to further unilateral concessions by forcing all European energy purchases to happen through a new “European Energy Union”,
Gazprom Tells EU No Deal on South Stream Restart. EU Free to Get Russia Gas in Turkey
- Now it's Gazprom that has no time for EU:
- No deal on Ukraine gas discount
- No deal on South Stream restart
- Announces it will drop Ukraine as a transit country
The shoe goes on the other foot
13
January, 2014
Translation
from Finnish by Petri Krohn
Yesterday
on Wednesday the EU negotiated with Gazprom in Moscow. The EU
negotiators had three aims:
1.
Pressure Russia into extending the special winter pricing on gas
supplies to Ukrainian due to end in March,
2. Force Russia to further unilateral concessions by forcing all European energy purchases to happen through a new “European Energy Union”,
3.
Pressure Russia to resurrect the canceled South Stream gas pipeline
project and build it in accordance with the restrictive rules of the
Third Energy Package.
The
Russian response was a cold shower.
Firstly,
Gazprom said there is no need for a special summer agreement on
Ukrainian gas purchases, as a valid contract already exists.
In
practice, this means that all the concessions Kiev has received for
the winter season are temporary and there is no space for
negotiations.
If
the EU wants to ensure their gas transits through Ukraine then it
must put pressure on Kiev to comply with existing agreements.
If
Kiev needs gas it cannot afford to pay – thus endangering transit
deliveries to EU countries – it is not Russia's problem.
The
same applies to Kiev's gas debts; the EU will have to pay both the
Ukrainian gas debts and any future gas purchases.
Secondly,
Gazprom announced that the South Stream gas pipeline project is dead
and will not be realized. The project collapsed under US and EU
pressure.
The
greatest obstacle turned out to be EU's Third Energy Package. It
places heavy restrictions on how Gazprom could use its own pipeline;
Gazprom could only use 50% of South Stream capacity and would have
been forced to offer the remaining 50% to third parties.
Although
all the agreements between Gazprom and the various transit and
consumer countries were made before the Third Energy Package entered
into force, the European Commission now demands that it is applied
retroactively.
Russia's
solution is as follows: Gazprom will build the pipeline to Turkey and
extend it to the Turkish-Greek border. The pipeline will end in a gas
distribution hub near the EU border.
If
the EU wants to buy gas, it will have to build a pipeline to Turkey
at its own expense. It will also need to expand the gas transport
capacity between its South European member countries – and do so
under the constraints imposed by its own Third Energy Package.
The
final punch to EU arrogance was Gazprom's declaration that after the
completion of the gas hub and the Turkish pipeline Gazprom will end
all gas transit through Ukraine. Russian gas will only be available
through Turkey!
The
Ukrainian pipeline network will be used exclusively supply gas to
Ukraine. Gazprom based its decision on Ukraine's instability and the
high transit risks.
Maroš
Šefčovič, the week-old European Commissioner for Energy Union must
have had the worst day of his life. EU arrogance hit a brick wall.
A
major scandal is brewing about how Germany ruthlessly secured its own
gas supply through the Nord Stream Pipeline and then used all means
possible to sabotage the South Stream pipeline.
There
is no surer way to inflame the North-South conflict in the EU. The
prospective users of the South Stream pipeline are sure to feel
“eternal gratitude” to the United States for killing the project.
The
perpetual EU candidate Turkey will feel Schadenfreude watching the
EU's plight while calculating the future revenues from gas transits.
Turkey also happens to be Gazprom's second-largest customer after
Germany. The biggest loser will be Ukraine, the world's preeminent
gas siphoner and blackmailer.
Despite
all the arrogant talk the EU has no real alternative to Russian
natural gas. Brussels has to swallow it pride and come to its senses.
Now
we are anxiously waiting for the Western mainstream media's spin on
the story.
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