A Russian proposed natural gas line through the Baltic Sea could kill Ukraine, says Amos Hochstein, Special Envoy for International Energy Affairs at the U.S. Department of State. Hochstein warned about the economic impact on Ukraine in an interview with a Slovakia news publisher called EurActiv. He retweeted his interview on his Twitter account July 29.
The 745 mile pipeline is a joint project between Gazprom and five West European partners including Shell Oil. Russia’s gas giant Gazprom owns 50% and the Europeans companies own 10% each. Critics in the Baltics, including the largest vocal opponent, Poland, say that the pipeline isn’t needed because there already is one connecting north Russia gas fields to Germany. The company, Nord Stream AG, is a joint venture between Gazprom and four other European players, including France’s GDF Suez and Wintershall once again.
Twinning is winning! Gazprom thinks two pipelines going in the same direction are better than one.
Hochstein said the pipeline undercuts deliveries from the southern belly of Europe, which traditionally have come into the West via Ukraine. Russia and Ukraine have been locking horns since the 2014 ouster of a pro-Russia president and the annexation of Crimea, then a Ukrainian administered peninsula on the Black Sea.
Hochstein said the pipeline costs $12 billion, but Platts estimates that it costs less than half that.
“If you were a shareholder and you walked into a company and said, ‘We are going to spend 12 billion dollars for something we don’t need’ they’d fire the CEO. Unless, it is not about shareholder value. Unless, it is not about economic value. Unless, it’s there to pursue political gain by the political levels and not by the CEO and the Board,” Hochstein said. Gazprom is state-run but its stock trades in the market.Just to make things really interesting you also have the Trans-Anatolian Pipeline running gas from Azerbaijan and scheduled for completion in 2018:
Hochstein’s comments have been repeated incessantly by the West, causing Gazprom CEO Alexei Miller to say two months ago that the project was not political.
“Here is the level of damage you do with a project like Nord Stream 2: You take two billion dollars of revenue from shaky economy like Ukraine at a time when the international community is trying to support it. How do you recover from that? There is an easy answer. You can’t,” Hochstein said in the interview. “The economy will collapse.”
Nord Stream 2 might also be negative for southern Europe, which defers to Ukraine pipelines for Russian gas. On May 23, Eni CEO Claudio Descalzi told Reuters it was a project that would gives energy pricing advantage to northern Europe, while Italy may face higher transit fees....MORE
And the currently-on-hold Nabucco pipeline: