Alexander Novak, Russian minister of energy, said in a Dec. 25 interview with the Russian media outlet Kommersant that Russia is capable of “fulfilling its long-term (gas) contracts, even if the gas transit contract won’t be signed (between Ukraine and Russia).”
The comment by Novak contradicts a statement given by German Chancellor Angela Merkel, on Nov. 29, in which she suggested that even after Russia commissions a new pipeline, Ukraine must remain a gas transit country.
The current contract between Russia and Ukraine, concerning the use of Ukraine’s gas transmission system, by which Russian gas is transmitted through Ukraine to Europe, is set to expire in December 2019.
Novak cited the court hearings between Naftogaz, Ukraine’s state-owned energy conglomerate, and Gazprom, the Russian state-owned gas giant, as the main obstacle to signing a new deal between the two countries.
The minister’s statement comes as construction has already gotten underway on Nord Stream 2, the second line of the Nord Stream gas transit system, which connects Russia with Germany through the Baltic Sea.
As of December 2018, 370 kilometers of the needed 1,224 kilometers have already been built, according to Nord Stream AG, subsidiary of Gazprom and the official contractor for the project.
The gas pipe is set to cross the exclusive economic zone of 5 European countries, with 4 out the 5 countries involved have green-lighted the project, the only exclusion being Denmark which is still deciding on the matter. As of Dec. 23, the constriction of Nord Stream 2 has reached Sweden.
Ukraine, together with Poland, Baltic countries and the United States oppose the construction, as it is a threat to Ukraine’s economy in the wake of the countries defense against Russian aggression and is “a step back for European energy security and US interests,” according to a document published by the U.S. Congress, on Dec. 12, with the document proposing new sanctions on companies involved in the construction of the pipeline.
U.S. National Security Adviser John Bolton said in an interview with The Wall Street Journal on Dec. 6, that the U.S. is considering a “variety of things,” including sanctions to stop the project.
Nonetheless, Alexey Miller, CEO of Gazprom, stated in a recent comment to Russian media that the construction of Nord Stream 2 is going according to plan and that the pipeline will be fully operational by Jan. 1, 2020.
The recent comment by Novak, who proposed that Russia may fully deliver gas to the European market without Ukraine if the contract between the two countries won’t be renewed in 2019, is somewhat misleading. The estimated transit capacity of Nord Stream 2 is 55 billion cubic meters of gas a year, while Ukraine transported 94 billion cubic meters of natural gas through its gas transmitting system, in 2017.
Russia sells to Europe around 200 billion cubic meters of gas yearly, while the new pipelines built around Ukraine lack the necessary capacity.
Even so, the completion of Nord Stream 2, together with TurkStream, a planned gas pipeline that will connect Russia and Italy through the Black Sea, will have a negative effect on Ukraine’s economy.
Andriy Kobolyev, head of Naftogaz, in an interview with Economichna Pravda on Sept. 15, stated that Ukraine currently receives $3 billion yearly from transmitting Russian gas to Europe, with the sum crucial for the Ukrainian economy. Yet, he pointed out that money is not the only problem.
“If (Ukraine) won’t transit gas, it will open the door for a full-fledged Russian military invasion of Ukraine. This is not only a question of Naftogaz’s or Ukraine’s money but also a question of security. Not only ours but of the entire European Union,” said Kobolyev.
