Nord Stream 2, Turkish Stream Doubtful

Two major projects spearheaded by Russian gas monopoly Gazprom striving to bypass Ukraine seem more uncertain than ever as a Russian-Turkish pipeline may fall under restrictive measures against Ankara and Russia’s plans to extend its natural-gas link to Germany faces objections from some EU countries.

Russia’s Economic Development Minister Alexei Ulyukayev said the Turkish Stream gas pipeline project falls under the restrictive measures against Turkey. Russia has announced that it will impose import sanctions on Turkey and cancel major investment projects as the spat between the two countries over the downed Su-24 fighter jet continues.

Meanwhile, ten European governments have reportedly complained in a letter that Nord Stream 2 is against EU interests and risks further destabilising Ukraine. They called for a summit-level debate on the issue.

In September, Germany’s BASF, E.ON, France’s ENGIE, Austria’s OMV and Anglo–Dutch Shell signed an agreement with Gazprom in September to expand its Nord Stream pipeline to Germany, bypassing Ukraine.

The Nord Stream 2 project envisages the construction of two offshore strings with an aggregate annual capacity of 55 billion cubic metres of gas, to be laid from Russia to Germany across the Baltic Sea. Nord Stream 2 would double the throughput of our up-to-date non-transit route via the Baltic Sea.

On November 25, Gazprom said it would halt gas deliveries to Ukraine while Kiev said it could find cheaper supplies elsewhere.

The letter, written on November 26 and signed by Bulgaria, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia, reportedly says the project should come under the closest regulatory scrutiny and called for "an inclusive debate” at next month’s EU summit.

"We have not received any letter,” a European Commission energy spokeswoman told New Europe on November 27, adding, "Our position on Nord Stream is crystal clear”. She reminded that EU Climate and Energy Commissioner Miguel Arias Cañete said in his speech in Strasbourg in October that the Commission has taken note of the shareholders agreement to build two further stretches of the Nord Stream pipeline. Cañete highlighted the EU’s diversification strategy. The Commission wants to reduce the bloc’s dependence on Russia, which supplies about a third of its energy.

Although Cañete said that Nord Stream 2 remains a commercial project, he stressed that the pipeline will have to fully respect EU law, in particular the Third Energy Package, but also environmental, competition and public procurement rules.

"Transport capacity from Russia is currently only used at around 50% rate and that already well exceeds the EU’s needs for likely future supplies. If constructed, Nord Stream 2 would – according to our estimates – increase excess transmission capacity from Russia even further,” he said. "I want to stress that the Commission actively supports efforts to ensure that Ukraine is and will remain a stable and reliable transit route.”

The letter from the 10 EU countries on November 26 said the Nord Stream extension to deliver increased volumes of gas straight to Germany could have serious consequences for Kiev and EU nations.

Preserving the transport route through Ukraine is the strategic interest of the EU as a whole, not only from an energy security perspective, but also reinforcing the stability of the Eastern European region, it said. If Nord Stream 2 is constructed Ukraine stands to lose $2 billion a year from Russia gas transit fees to Europe which could destabilise the former Soviet republic further at a time when the EU is trying to provide financial assistance.

Cañete told reporters on November 26 that Ukraine is a safe transit route. "Gas should continue to flow through Ukraine,” he said. He added the Commission was not unduly concerned by the cutoff of Ukraine’s gas supplies – a recurrent event – as stocks were comfortable.

A day earlier, Gazprom said Ukraine had received all gas it had paid for, adding it saw serious risks to secure gas transit to Europe via Ukraine in winter due to the stoppage. Russian Energy Minister Alexander Novak also accused the Ukrainian authorities of deliberately refusing to help rebuild power lines to Russia-annexed Crimea, which were blown up by unknown saboteurs.

The letter from the ten EU countries against Nord Stream follows a statement by Slovak President Andrej Kiska on November 23, who argued that implementation of Nord Stream 2 contradicts EU energy security interests and may become a Russian policy tool. The project contradicts efforts to decrease EU dependence on Russian gas supplies, which may be used by Russia as a tool to reach its political goals, he said. Kiska said he’s concerned about Slovakia and Ukraine losing their status of key transit countries for delivering Russian gas to the EU. He also expressed doubt that the project is purely commercial. "Many our partners in the EU use arguments that this is a purely commercial project of private companies, which has nothing to do with politics. This position contradicts our experience,” President said, adding that the project’s implementation may turn into a drama when gas supplies will be used in the interests of the politicians.

Both Nord Stream 2 and Turkish Stream plan to bypass Ukraine. Ulyukayev said Turkish Stream is no different from any other projects facing Russia sanctions against Turkey. "We are talking about our investment cooperation [with Turkey], it is one of the most perspective investment projects, and, just like any other project, it falls under the law on special economic measures,” Ulyukayev said.

Construction on Turkish Stream was scheduled to begin in June, but was postponed pending a formal agreement. According the Russian Energy Ministry, Russia and Turkey were expected to sign the pipeline agreement no earlier than December 2015.

Earlier on November 26, Russian Prime Minister Dmitry Medvedev instructed the Russian government to work out measures against Turkey after the downing of a Russian military jet on November 24. Turkey’s President Recep Tayyip Erdoğan called Kremlin’s reaction to the incident is "emotional” and "unfitting of politicians”.