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Wednesday, July 19, 2017

Statement of Ukraine about the benefits of its transit unproven

Ukraine changes the rhetoric, trying to persuade Russia to use its gas pipeline system for transit of gas to Europe. If previously sounded solely political arguments, it is now asserted that the Ukrainian route is economically more profitable than direct gas pipeline “Nord stream – 2”. Whether so it actually?

According to Naftogaz, the Ukrainian gas transportation system will transport 110 billion cubic meters of gas per year, the cost of transport will be four times lower compared to the Nord stream – 2″. And in the case of 70 billion cubic meters – three times, I believe in the Ukrainian company.

“Russia has no less powerful commercial argument in favour of Nord stream-2″ costs of maintaining the old Ukrainian pipeline”

Thus, the Naftogaz said on Friday the head of Gazprom Alexei Miller, who explained the disadvantage of Ukrainian transit compared to a direct Northern route. We can say that for the first time Ukraine has moved from political statements to try real economic justification for gas transit through its territory. She did this, however, is quite awkward.

Thus, the current tariff for gas transportation via Nord stream – 1 is 2.1 USD per thousand cubic meters on 100 km, on the territory of Ukraine – $ 2.5. That is, the transit through the territory of Ukraine is already 20% more expensive than the current direct gas pipeline, the analogue of which is the Nord stream – 2″. And this is now – and in fact, the Ukrainian authorities threatened to further raise the transit fare, and at times.

In addition, according to Miller, operating costs along the Northern corridor, via the system of trunk pipelines Bovanenkovo – Ukhta, Ukhta – Torzhok much lower than along the Central corridor. “This allows us to show that the cost of shipping gas from Russia to Germany via the Nord stream is 1.6 times lower than transit through the territory of Ukraine under the current transit tariff,” said Miller.

“It is obvious that transit at 110 billion cubic meters per year through Ukraine already never will be, so comparing the cost of transit, provided such volume is meaningless,” says head of the sector of IEF Sergei Agibalov. Besides, that is the basis of the analysis of benefits to transit Ukraine, Naftogaz began to spread. That is, their calculation is completely unsubstantiated – unlike the open computing Miller.

You can also add that just a few weeks ago the financial Director of Nord Stream 2 Paul Corcoran resulted in more meaningful data about the economy with the Nord stream – 2″.

Miller led the actual transit rate under the current contract. Despite the fact that the now low price of oil and gas, and this has implications for tariffs. The price of gas is accounted for in transit. When prices were higher, the rate of the Ukrainian rate was 3.5 dollars, for example,” – says the newspaper VIEW Deputy Director of the national energy security Fund Alexei Grivach. The expert notes that “in the form of dividends Gazprom receives back a part of the tariff as a shareholder of the project “Northern stream – 2″. And this ultimately reduces the cost of transportation even stronger.”

Finally, another important point is that the Ukrainian authorities consider the current tariff for transportation of gas are too low and want more, although this is contrary to the current contract. They even judged on this issue with Gazprom in Stockholm.

“But if Ukraine had such an opportunity (and it will be after the expiry of the transit agreement at the end of 2019), they would have increased the transit tariff for Russia. They believe that Gazprom should pay them $ 50 on the system “entrance-exit” from the border with Russia to the border with Slovakia. This is another level: if the count rate for 100 km, then the length of the Ukrainian pipeline of 1,200 km is obtained more than four dollars per thousand cubic meters,” – says Grivach.

In this case Gazprom does not end there. If you look at the map, Nord stream – 2″ is the shortest export route from the resource base in the Yamal Peninsula to markets in the EU. Nord stream – 2″ is a direct continuation of the Russian gas pipelines Bovanenkovo – Ukhta and Ukhta – Torzhok. The supply route through Ukraine for more than two thousand kilometers long, and for transit have to pay more.

But the shortest route to Germany through Belarus and Poland, retorted in his LJ, the President of East European Gas Analysis Michael Korchemkin.

“In terms of length but in terms of number of transit countries of the “North stream – 2″ is actually the shortest direct path,” says the newspaper LOOK associate Professor of the higher school of Ranepa, senior researcher of the sector of the energy policy Institute of Economics of RAS Ivan Kapitonov. Because the route through Belarus and Poland would mean the presence of two transit countries, and this increases the political risks.

“The route of the Yamal – Europe to the borders of Germany through Belarus and Poland shorter route “Nord stream” only 100 km, but this is not important,” agrees Sergei Agibalov from IEF. More importantly, he adds that from the point of view of overall efficiency of the transportation cost Nord stream more profitable, because there the bulk of payments for transit will be to Gazprom itself.

The head of Gazprom considered which will suffer losses if Russia will continue to supply gas via the Ukrainian GTS. “We sometimes hear that it is necessary to leave the transit through Ukraine in the amount of approximately 30 billion cubic meters per year. Let’s see what this is terms of additional costs for Gazprom. This additional operational costs for 25 years in the amount of from 25 to 43 billion dollars,” – considered the head of gas holding. “The question arises, who and how will compensate these costs to Gazprom?” – rightly asks Miller in response to all the statements of European and American politicians that Russia should continue its transit through the Ukrainian GTS. In other words, to continue to feed Ukraine at a loss.

Russia still has a purely economic argument in favor of the Nord stream – 2″ (as opposed to political requirements in Europe) is the cost of maintaining an old Ukrainian pipeline.

“Gazprom claims about the critical wear of the Ukrainian GTS are supported by objective data,” says associate Professor of the higher school of the Academy and senior researcher of the sector of the energy policy Institute of Economics of RAS Ivan Kapitonov. – Before the coup in Ukraine it was estimated that in 2010 required more than 6.5 billion dollars to upgrade the Ukrainian pipeline system. Ukrainian GTS is really extremely worn: the earliest pipes date back to 1977, and the period of operation is 40 years. They are commonplace fail. Accordingly, increasingly required for the maintenance of the infrastructure.”

“We understand that the new pipeline route is not just takes political risks, but also reduces the economic burden on the transit. Just need to pay 8.9 billion euros (for the construction of “Nord stream – 2″ – approx. OPINION), and we will have a modern pipeline system to an unstable state,” concludes Kapitonov.

All this proves that Russia is for economic reasons, it is desirable to abandon the Ukrainian transit in favor of a direct and short route. And Ukraine’s attempts to present the situation in reverse perspective, that of pure speculation.

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