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Gazprom doubling down on Nord Stream II
Journal Staff Report

KIEV, March 14 - Russia's biggest gas company is really doubling down on its proposed Nord Stream II pipeline even as political pressure and new realities of the global energy markets weigh against it, Forbes said Tuesday.

Gazprom is relentless, and despite its biggest partners being largely sidelined due to a Polish anti-trust decision last year, the Russian juggernaut insists on laying pipe right along a gas line that already exists in the Baltic Sea. Some call it the "anti-Ukraine" pipeline.

Russia sees it as a way to lock in Europe to longer term supply deals. But this is coming at a time when a number of countries, like India, are turning down long term contracts because spot market oil and gas prices are cheaper.

"We know what that pipeline means for us," says Andriy Kobolyev, the CEO of Naftogaz, the biggest gas distribution company in Ukraine. "It means that eventually Russia will no longer need to transit gas through Ukraine to get to Europe. The country would lose billions of dollars and so not only would this be bad for this company, but it would be a problem for Ukraine," he says.

The Nord Stream II pipeline would run right alongside the already existing Nord Stream I pipeline, which brings Russian gas into Europe. The pipeline is part of two routes that would remove Gazprom's dependence on Ukraine. T

The other deal is the so-called Turkish Stream pipeline, which is seen by oil industry experts as making more business sense than Nord Stream II. Turkish Stream was proposed and signed between the two governments after South Stream went belly up once southern Europe sided with Brussels and Berlin regarding the pipeline's death blow to Ukraine.

Oddly enough, Germany has been relatively quiet on Nord Stream II, which means southern Europe natural gas imports would come from Germany. Meanwhile, Ukraine is an afterthought.

Once bosom buddies, Ukraine and Russia have gone their separate ways since the Feb. 2014 ousting of pro-Russia president Vladimir Yanukovych in favor of a pro-EU movement that hopes to ink a trade deal with the European Union.

Moreover, Nord Stream II was roadblocked by Polish authorities recently. Their anti-trust division declared that Gazprom partners like Shell Oil would have too big of a market in Poland. The unspeakable portion of that decision may have also been the fact that Poland recently invested billions in a new liquefied natural gas project in an effort to diversify away from the Russians.

The New York Times reported Monday on the European Commission's acceptance on Gazprom to address charges that it is monopolizing regional gas markets. Margrethe Vestager, the anti-trust commissioner of the EC, could have imposed fines and forced Gazprom to change the way it does business, but something is holding her back.

We believe that Gazproms commitments will enable the free flow of gas in Central and Eastern Europe at competitive prices, Vestager said in a statement that was highlighted in the Timesarticle.

This was music to Gazprom's ears.

The company continues to be a laggard in Russian equity markets and, as the Times article pointed out, has lost well over $100 billion in market capitalization over the years as investors turn away. Gazprom shares rose only 5% last year in dollar terms while the VanEck Russia (RSX) rose 22%. This year, Gazprom is down another 16%. (fb/ez)

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Currencies (in hryvnias)
  18.06.2018 prev
USD 26.32 26.22
RUR 0.420 0.421
EUR 30.52 30.76

Stock Market
  15.06.2018 prev
PFTS 462.8 454.3
source: PFTS


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