Commission unimpressed by Russia’s pipeline offensive

Alexander Novak, with Maroš Šefčovič [R] [European Commission]

BREAKING / Russia and Greece signed a deal today (19 June) for a section of the Turkish Stream pipeline across Greece, and Gazprom announced plans to build two additional stretches to the Nord Stream gas pipeline.

But the Commission said more Russian gas was not needed, and that it would thoroughly scrutinise the new projects for compliance with EU rules.

The visit of Greek Prime Minister Alexis Tsipras to Russia today has brought about the signature of a memorandum for the construction of a section across Greece of the so-called Turkish Stream, or TurkStream pipeline, names the authorities in Athens dislike.

>> Read: Tsipras: ‘Turkish Stream’ will have another name on Greek territory

The deal was signed between Russia and Greece’s energy ministers, Alexander Novak, and Panagiotis Lafazanis, for a pipeline with a capacity of 47 billion cubic meters a year (bcm/y).

Construction of the Greek section of the Turkish Stream pipeline will start in 2016 and be completed by 2019. The two countries will have equal shares in the company, Novak was quoted by RT as stating at the International Economic Forum in St. Petersburg on Friday.

Novak said Russia will initially finance the construction of the pipeline, according to Sputnik.

“Our meeting today is a historical meeting… The memorandum expresses the readiness of both sides to bring the south direction of the pipeline to implementation,” Lafazanis reportedly said.

In addition, Gazprom announced that it would build two additional stretches to the Nord Sea pipeline to Germany under the Baltic, with a trio of Western energy companies.

“Since the commissioning of Nord Stream pipeline, Gazprom has been investigating potential extension of this export route. Now we are going to proceed with the implementation of this project together with our partners,” Gazprom Chief Executive Alexei Miller said in a statement.

Gazprom’s partners in the Nord Stream, a major gas supply artery feeding into western Europe, are Anglo-Dutch Shell, Germany’s E.ON, and Austria’s OMV.

Gazprom would own 51% in the project to build stage 3 and 4 of Nord Stream, with capacity of 55 bcm/y, Gazprom spokesman Sergei Kupriyanov said on the sidelines of the St Petersburg meeting.

Russia’s goal is to find new ways to deliver gas to Europe bypassing conflict-stricken Ukraine, and using the pipeline projects to increase its influence in friendly countries such as Greece, Serbia, and Hungary.

Commission reaction

EURACTIV asked the European Commission to comment on Russia’s plans. This is the written answer received:

“The European Commission takes note of the announcement by Gazprom, together with OMV, Shell and E.ON, to consider building two further stretches of NordStream pipeline, with an additional capacity of 55 bcm per annum. Furthermore, Gazprom had announced in January 2015 that it would build the Turkstream project, which in addition to a pipeline serving Turkey would include a capacity of 47 bcm to Europe, via Turkey.

“Energy security remains a key priority for the Energy Union. As stated in the Energy Union framework strategy, energy diversification is crucial for ensuring secure and resilient energy supplies to EU citizens and companies. In this context, the European Union is particularly committed to diversification of gas suppliers (countries), counterparties (companies) and routes.

“To ensure this objective, the Commission aims at more interconnected and competitive gas markets in Europe, with projects such as the Southern Gas Corridor, the establishment of liquid gas hubs in the Mediterranean area and LNG being in the centre of this strategy. It should be recalled that work to that effect is also being carried out among others in the framework of CESEC High Level Group and EU LNG and storage strategies.

“The EU is currently importing about one third of its gas from Russia, about half or which currently transits Ukraine. While European domestic production is expected to decrease in the coming decade, existing capacity from Russia is currently only used at around 57%. This shows that current transport routes from Russia to the EU, including through Ukraine, already well exceed the EU’s needs for existing and likely future supplies of pipeline gas from Russia to the EU.

“The European Commission recalls that new pipelines must be built in full compliance with EU legislation and the will be vigilant about the rigorous application of EU law notably in the field of energy, internal market and competition.

“Finally, the European Commission reiterates its position that Ukraine has been a major reliable transit country and provides an economic route for supplies to Europe. In this context, the EU actively supports the efforts of the Ukrainian Government and Naftogas to ensure that this remains the case, in particular the reforms that Ukraine is currently undertaking to ensure full compliance with the EU acquis it has committed to as a member of the Energy Community. The EU therefore believes that it is in the interest of all parties that Ukraine remains an important transit country.”

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