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Ukraine is preparing to suffer losses due to “Nord Stream-2”

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

Completion of the construction of the Russian project “Nord Stream-2” is nearing.

The head of the Swiss company Nord Stream-2, which is the operator of the gas pipeline, Matthias Warnig, announced the imminent completion of pipe laying on the offshore section.

According to him, the works hould be completed by early September. Tests will take another couple of months. And by the end of this year, the gas pipeline will most likely be ready for commissioning. The project is currently 98% complete.

The full capacity of NordStream-2 will be 55 billion cubic meters per year. This figure is comparable to the volume of gas pumped through Ukraine in 2020 (55.8 billion cubic meters).

The completion of the pipeline raises certain concerns among stakeholders. To a greater extent, probably, in Ukraine. Indeed, incase of an unfavorable development of circumstances, Kyiv may suffer greatly from the loss of transit and the purchase of European gas obtained through the virtual reverse.

During the July 12 meeting of Ukrainian President Volodymyr Zelenskyy and German Chancellor Angela Merkel, the Nord Stream-2 issue was one of the main issues on the negotiating agenda.

Frau Merkel has never hidden her position and is clearly in favor of the release of this project. At the same time, she assured Zelensky that Germany would support the preservation of the transit of Russian gas through the territory of Ukraine even after the expiration of the current contract in 2024.

Upon his return to Kiev in the framework of the weekly political forums Ukraine 30, the Ukrainian leader expressed hopes that on July 15, within the framework of negotiations, German Chancellor Angela Merkel and US President Joe Biden would agree on guarantees to Ukraine after the launch of the Russian gas pipeline.

Among such guarantees, the president named compensation payments and uninterrupted gas supplies for the next 10-15 years at an affordable price. Ukrainian Foreign Minister Dmytro Kuleba named the transfer of 5-7% of Nord Stream 2 shares to Ukraine as possible guarantees.

Now about the guarantees. Neither the United States, nor Germany, nor other EU countries are likely to want to take on financial obligations to pay compensation to Ukraine. The most that Kiev can count on here is putting pressure on Moscow to extend transit contracts. The current contract provides for the obligation to pump /pay for the pumping of 40 billion cubic meters of gas until the end of 2024. Last year, Ukraine received about $ 7 billion for transit. This year the contract volumes are 30% less. And this will have atangible impact on the country’s budget. After 2024, the transit volume will not completely stop, but it may decrease to 10-15 billioncubic meters. And this is somewhere at the level of the prime cost of pumping and servicing the GTS of Ukraine.

In addition, a significant decrease, as well as the termination of the transit of Russian gas through Ukraine, will lead to the end of purchases of European gas through the so-called “virtual reverse”, when part of the supplied gas immediately remains in Ukraine. Real gas supplies from Europe will significantly increaseits cost.

Ukrainian officials are well aware of this. The head of the Ukrainian GTS operator, Sergei Makogon, said that the “only acceptable” optionfor Kiev is to extend the contract with the Russian side for pumping of 45-50 billion cubic meters per year under the guarantees of European partners.

Russian President Putin has already expressed his position that “Russia is not obliged to feed everyone.” Such a statement does not inspire optimism and makes it clear that it is probably not worth waiting for financial guarantees from the Russian side.

In this situation, Ukraine can only hope for the European and American gods. And they, as you know, are often merciless.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

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Wesaf
Wesaf
July 16, 2021

What happens when you bite the hand the feeds you. I don’t know what the Americans are doing there, they will only bugger it up.

Yes Indeed
Yes Indeed
Reply to  Wesaf
July 16, 2021

It’s in American DNA to 1) ‘go do’ everywhere and 2) bugger their doings up.

Cranky Old Lady
July 16, 2021

Russia is obligated to pay a fixed sum till 2024. After that they don’t need to pay any guarantee and the savings will pay for the cost of NS2 within 3 to 5 years.
Ukraine may find it cheaper just to tell Donbass been nice knowing you bye.

Trumponomics
Trumponomics
Reply to  Cranky Old Lady
July 16, 2021

Project investors worldwide dream of 3-5 yr. paybacks. I think Trump tried to kill it out of mere jealousy.

Besides, The Guardian never explained why, with all that kompromat on Trump, why the RU didn’t pull his strings on that one. I’m going to start calling all MSM Trump/Russia commentary ‘Swiss cheese journalism’. Has a nice ring to it.

Last edited 2 months ago by Trumponomics
Reality Check
Reality Check
Reply to  Cranky Old Lady
July 16, 2021

“Ukraine may find it cheaper just to tell Donbass been nice knowing you bye.”

Haven’t they in all honesty, already done that and just continue with their civilian terror campaign out of mere spite?

A Pox on them Both
A Pox on them Both
Reply to  Reality Check
July 17, 2021

Killing civilians out of spite. Nice folks the US/EU choose to support.

Yes Indeed
Yes Indeed
July 16, 2021

If I were Gazprom, I’d offer to supply gas at the RU-UA border only and let the EU sort out UA pipeline maintenance/replacement and transit fees and what their delivered price is at the endpoint (if they ever receive it)

That’ll kill any UA alternative on the spot.

Daniel C
Daniel C
July 17, 2021

From my understanding, the pipeline wasn’t Russia’s idea, it was Germany that wanted and needs it. let the Germans sort that out if they feel badly for the Ukraine.

Last edited 2 months ago by Daniel C
gte
gte
Reply to  Daniel C
July 17, 2021

Correct. The pipeline was Germany’s idea and it took some persuasion to get the Russians on board. Its amazing how they manged to turn it around and blame Russia in that Russia wants to use Nord Stream 2 to stifle Ukraine.

The Green Gestapo
The Green Gestapo
Reply to  Daniel C
July 17, 2021

I think the Greens should arrange a walking tour of Ukraine’s new ‘Ukrainian heroes of WWII monuments.

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