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08/12/2016

Former Czech PM promotes Eastring gas pipeline

Central Europe

Former Czech PM promotes Eastring gas pipeline

Mirek Topolánek [European Commission]

EXCLUSIVE / Mirek Topolánek, former Prime Minister of the Czech Republic, and President of the Council of the EU during the Czech Presidency in 2009, is now in charge of the promotion of the Eastring gas pipeline project, designed to link Central with Southeastern Europe. On a visit to Brussels, he explained the project to EurActiv.

Topolánek said that he had left politics after 2010, and started work as a consultant in the energy sector. Last year, Daniel K?etínský, the owner of Energetický a pr?myslový holding (EPH) and one of the richest persons in the Czech Republic, offered him the job of International Development and Public Affairs Director at Eustream.

Formerly known as the Druzhba pipeline, built in Soviet times, Eustream remains the biggest route for Russian gas into Europe. Today, 51% of Eustream is state-owned, while 49% is owned by EPH. But more importantly, Topolánek is also responsible for the promotion of Eastring, a project announced last November in Bratislava, just before the announced cancellation of the South Stream project.

Eastring is a proposed pipeline, a version of which is 832 kilometres long, and runs across Slovakia, Hungary and Romania, while another version is 1274 kilometres long, and reaches Bulgaria. [See details here.]

One of its advantages is that Eastring uses the existing infrastructure of Eustream on Slovak territory, which was completely renovated after the 2009 gas crisis.

It is designed to transport gas in both directions, with a capacity of 20 billion cubic metres a year (bcm/y) at the first stage and 40 bcm/y at the final stage. Potential gas sources for forward flows are Azerbaijan, Turkmenistan, Iraq, Cyprus and Russia, while for the reverse flow, it is gas from Western European hubs. The optimistic target date for building the first stage of the pipeline is 2018.

The Russian priorities

Topolánek acknowledged that Eastring finds itself in competition with the so-called Tesla pipeline, which is the continuation of the planned Russian-sponsored Turkish Stream pipeline across the territories of Greece, Macedonia, Serbia, Hungary, reaching the Baumgarten gas hub in Vienna (see background).

>>Read: Greece, Macedonia, Serbia and Hungary discuss ‘Turkish Stream’

“When the Russian administration cancelled South Stream, this was not only due to some obstructions from the EU side. This project was extremely expensive, over-evaluated maybe more than five times,” Topolánek said.

According to Topolánek, the Russian priorities now were as follows:

  • Building the Turkish Stream pipeline across the Black Sea to the European territory of Turkey in two parallel lines. One would be for Turkey, which would take 16 bcm/y, and the other for the European countries, for fulfilling the contracts already signed.
  • The second priority of the Russian administration was the doubling of the capacity of Nord Stream pipeline, which had been designed with four parallel lines, with only two being operational at present.

As a result, Russia would fulfill its goal to stop the transit of gas across Ukraine, depleting the country of income from transit taxes.

Asked how bad was the news that Eustream would soon be dead, in terms of serving as a transport route for Russian gas, Topolánek said:

“Eustream will not be dead, because we will build the Eastring project.” He added that in any case, reverse flows to Ukraine would be maintained.

In Topolánek’s opinion, the beauty of the Eastring project is that such a North-South corridor would provide diversification of supply and of routes in spite of strong Russian control.

Messages to Bulgaria

In what appears to be a message to the Bulgarian authorities for supporting Eastring, he said: “Now there are have two options. One [Eastring] is going across Bulgaria, the other [Tesla] is not.”

Topolánek also invoked his experience as Prime Minister and holder of the rotating EU Presidency, which coincided with the gas crisis in the winter of 2009.

“Sergei Stanishev [the then-Bulgarian PM] called me every half hour, because the Bulgarian economy was being stopped,” he said, adding that the country needed an alternative source, and that Tesla was not such an alternative.

Tesla wouldn’t provide such diversification, as it is designed to bring Russian gas across friendly and cashless countries.

Topolánek also said that Bulgaria should realise that both projects in which it had put its hopes, Nabucco and South Stream, are dead, while Tesla was designed to bypass its territory.

The role of Turkey

Topolánek made it clear that he was not happy with the importance Turkey had gained, being key to so many gas infrastructures.

“Turkey has Blue Stream [an offshore gas pipeline linking Russia to the Asian territory of Turkey]. It will have Turkish Stream, TANAP [a planned pipeline to bring gas from Azerbaijan to the border with Greece]. It will have an interconnector with Iran and it will be very difficult to bypass,” he said.

That’s why, according to Topolánek, Eastring would play a crucial role as a connection between Western European gas hubs and “a potential Bulgarian-Turkish gas hub”, which could increase the chances of the project of obtaining political support.

Geopolitics above all

Eastring is going only across members of the European Union and will fulfill all the EU rules, he argued. Topolánek added that both Gazprom and Turkey’s Botas, or a Western company, would be able to book capacity, as the project would be open for access to third parties.

“I don’t think the European Commission would support a project going via Greece, FYROM, Serbia and Hungary, a project with a very strong geopolitical influence by Russia,” he said.

Topolánek appeared confident that Eastring would qualify as a “Project of common interest” for the EU, although he insisted that it was a commercially viable project which could make it without subsidies.

“Of course, we would be happy to have the opportunity to receive money from European funds. But the project is bankable without subsidies,” he said.

“I’m absolutely convinced that Eastring will be the cheapest among all options for a North-South corridor”, Topolánek said. The estimated capital expenditures (CAPEX) is of €1.377 to €1.625 billion, according to the two route options.

“€100 to 150 million equity per partner, per TSO is enough, and it’s not big money,” he said.

Asked what contacts have been already established to push forward the Eastring project, Topolánek said “hundreds” of meetings had taken place in the respective countries, at the technical and political level. Before a joint meeting of the countries concerned takes place, a decision of the Romanian government was expected, as the biggest stretch of the pipeline runs across its territory.

First decisions at Riga summit

A meeting at the level of heads of state and government is expected to take place in Riga, at the 21-22 May Eastern Partnership summit, Topolánek said. Apart from the Prime Ministers of Bulgaria and of Hungary, he said the presidents of Romania, the Czech Republic and of Slovakia would attend, and also possibly the Presidents of Azerbaijan and of Ukraine. A proposal for a common memorandum has just been circulated, he added.

“This project would be possible when leaders would be able to play more common game than national game”, Topolánek said.

“It’s a more geopolitical decision rather than technical”, he concluded.

Background

Facing objections from the European Union, in December, Russia abandoned its $40 billion South Stream project which would have been extended under the Black Sea to Bulgaria, and carry up to 63 billion cubic metres (bcm) of gas annually to Europe.

Instead, Russian gas exporter Gazprom said in January it planned to build an undersea gas pipeline with the same capacity to an as-yet unbuilt hub on the Turkish-Greek border by the end of 2016.

The EU is sceptical as to the chances of this project and officials in Ankara said that its timeframe was unrealistic.

>> Read: Šef?ovi?: Turkish Stream ‘will not work’

>> Read: Political concerns mar Turkish Stream project

However, the foreign ministers of Greece, Macedonia, Serbia and Hungary met on 7 April in Budapest to explore their potential participation in Russian plans to build a pipeline tentatively called Tesla, which is a continuation of Turkish Stream across Greece, Macedonia, Serbia, Hungary, ending in the Baumgarten gas hub in Austria.

Further Reading