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December 10, 2019

Nord Stream 2 gas pipeline will have negative consequences for Ukraine

Nord Stream 2The expansion of Nord Stream will reduce transit of Russian natural gas through Ukraine, and will therefore limit revenue from transit fees, which are estimated at billions of dollars per year. In 2017, the country received 3 billion USD from Gazprom for gas transit. But the negative effects on Ukrainian consumers do not end here.

According to the experts, from the four main pipelines in operation, only one will remain at the moment and Naftogaz is not ready for such a scenario. Reducing the volume of transit will in fact leave a large number of consumers in Ukraine without natural gas.

The Ukrainian gas transmission network can absorb about 120-140 billion cubic meters of natural gas per year. With the construction of Nord Stream 2, this capacity will become redundant. Ukraine needs to think about what it will do with its gas network and natural gas distribution.

The gas transit contracts through Ukraine expire in 2019 and Gazprom has already taken steps in an arbitral tribunal to terminate them early. The Russian gas giant admits it will take at least an year and a half.

At the end of March, Germany gave all necessary licenses for Nord Stream 2. The project, however, is still awaiting the approval of the other countries through which it passes – Denmark, Sweden and Finland. The Russian authorities have not yet provided all the necessary documents for the new two pipelines on the Baltic Sea bottom.

The capacity of Nord Stream 2 is planned at 55 billion cubic meters. Its route runs alongside the existing Nord Stream gas pipeline.

Several countries from Central and Eastern Europe were announced against the new gas pipeline. In their view, this project will strengthen the EU’s dependence on Russian natural gas. The arguments of Russia and Germany are that the idea is driven only by economic reasons.

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