Thursday, June 21, 2018

Russia Is About To Cut Ukraine's Transit Role For Natural Gas

Proposed Nord Stream II route. Gazprom

Ariel Cohen, Forbes: Russia's Nord Stream II Pipeline Is Ukraine's Worst Nightmare

Ukraine is Russia’s gateway into European gas markets. Of the 193 billion cubic meters (bcm) Russia’s state-owned Gazprom pumped westward in 2017 – nearly 40 percent of Europe’s total supply – 93 bcm transited via Ukraine. Moscow, however, wants to change that, diminishing Ukraine’s transit role. Kyiv, on the other hand, hopes to maintain the current arrangement, as transit revenues contribute some USD 2-3 billion annually to the Ukrainian economy (roughly 3 percent of GDP) and act as a buffer against further Russian aggression.

The poor state of Ukraine’s energy sector, which is beset by aging infrastructure, overregulation, uncompetitive pricing, and limited diversity of supply, means that Ukraine is economically and strategically reliant on the Russian gas transit, and is buying Russian-sourced gas and coal despite the state of belligerency between Kyiv and Moscow.

Read more ....

WNU Editor: The older I get .... the more the news becomes the same. I am hearing the same arguments today on why Europe should not be dependent on Russian gas that I heard when the former Soviet Union was trying to sell gas to Western Europe in the 1980s. The argument to not buy from the Soviets was valid then .... but the Russia of today is not even close to what the Soviet Union was then. Money is what is driving Russia today (not ideology), and the Russians have proven themselves to be reliable suppliers of natural gas at prices that have been (and are) very competitive. And if Ukraine is cut-off because of their differences with Moscow, that is not Russia's problem.

4 comments:

jac said...

Ukraine have to develop alternate economy.

Anonymous said...

Agreed.I'm usually critical of Putin and much the Kremlin does. .but... it is their resources and they can do with it as they please. And Jac is right too.. Ukraine needs to get rid of its massive corruption problem that suffocates their entrepreneurs and larger economy

Anonymous said...

NordStream 2 decisions are affected by the sanctions imposed under Western solidarity so it is proper for the US to remind Germany of the impact of breaking ranks and undermining what Germany had agreed to do. Second the US has to acknowledge Germany hypocrisy on its energy arguments. American LNG is discounted by the Germans on price yet the Germans want wind and solar energy and don’t care that the prices are vastly higher than American LNG nor as reliable.

Germany wants to cozy up with Putin? Fine with me, but the Americans can logically conclude there is no need to worry about German security nor spend money defending it.

Andrew Jackson said...

The WW2 vets I knew who fought the Germans told me they could never be trusted,they were right.