The emerging ruling coalition in Germany might be experiencing hiccups when it comes to agreeing on complex issues, but the Nord Stream-2 project has proven a consensual ground. The German government has formally objected to the EC-proposed amendments to the EU Gas Directive citing trivial protectionist arguments atypical for a nation that pretends to lead the EU. The German government’s interpretation of its support for the Nord Stream-2 is that it is not defending Gazprom’s, but Germany’s own national interests, implying that German and Gazprom interests — Russia’s — are identical and run counter to the European Commission embodied shared interests. This is essentially Berlin’s bottom line – EU is dear to us, but when it comes to cash – our interests rate higher.   There is nothing fundamentally


The article first published in on 12/1/2017.   The inability of Angela Merkel and her putative partners to form a government has given rise to persistent calls, including from the chancellor herself, that what Europe needs now is a strong Germany. In fact, it is Germany’s unquestioned strength and willingness to throw its weight around that are to blame for much of Eastern Europe’s unhappiness with the EU at the moment. A case in point is the growing rift between Berlin and its eastern EU neighbors on some of the issues discussed by Merkel and her potential government partners.   Take for instance Merkel’s position claiming that the Russian Nord Stream 2 pipeline is simply a commercial project. To most of her eastern neighbors this is nothing if not crass German


  The news from Ankara these days ascertain an important segment in President Erdogan’s drive for global prominence as he is borrowing heavily from President Putin’s guide for autocratic leaders. Yet it is hard to see how he will be able to profit from the Kremlin’s recipes, lacking the tsar’s resources and insatiable pool of social patience.   Russia has been seeking to build on the rifts within NATO and US-Turkish relations by enticing Erdogan into a pool of geopolitical tradeoffs and gambles.   Putin’s attempts to undermine the EU and the US are persisting. The chance to help Turkey steer away from NATO’s mainstream and turn into its weakest element seems up for grabs.   President Putin is visiting Turkey this week to talk over a new strategic framework


  No wonder German, French and British energy companies grumbled upon the release of the new version of S.722  – the legislation expanding US sanctions on Iran and Russia. In part for a good reason – there were nuances, which the US Senators failed to address in the original version.   As Russian and Iranian companies hold shares in Shah Deniz – 2 (NIOC and Lukoil own 10 per cent shares) a verbatim application of the provisions of the US sanctions act would have essentially blocked the Shah Deniz project and the whole Southern Gas Corridor.   In the new draft, the sanctions apply only to companies and projects where Russian companies hold at least a 33% stake.   This change was expected as many governments, companies and the EC


  Two events overshadowed the geopolitical landscape on the eve of President Trump’s visit to Poland to attend the Three Seas Initiative Summit. The TSIS is a joint Polish-Croatian project, launched in 2016, with the aim of strengthening trade, infrastructure, energy and political cooperation among countries bordering the Adriatic, the Baltic and the Black seas. Twelve countries are members: Poland, Hungary, Czech Republic, Slovakia, Romania, Bulgaria, Lithuania, Estonia, Latvia, Croatia, Slovenia and Austria.   The fact that the American President will preach the case to CEE leaders for US LNG imports comes as no surprise, yet there is a hidden context and a more complex backdrop against which both the expectations and the deliverables of the visit should be judged.   The Case for US LNG gas   Washington has


  THE NEW US SANCTIONS AGAINST RUSSIA AND THE STRAINS IN TRANSATLANTIC RELATIONS     In a matter of a week, the cards in the geopolitical exchange between the US and Russia have been dramatically shuffled. The new bill, which passed by an overwhelming (97-2) majority in the US Senate, signals potential tectonic moves in transatlantic, EU and West-Russia relations.   Long before the EU public could read into the fine print of the US draft legislation, German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern warned in a joint statement that Europe’s energy supplies were “a matter for Europe, not for the United States.”   It is worth looking deeper into the semantics and the fallout of this bitter exchange.   First, energy supplies and energy security are


  The new Russian pipeline projects – Nord Stream 2 and Turkish Stream – are designed to kill Ukrainian gas transit. However, there also is a collateral damage – the diversion of gas flows would significantly reduce transit volumes and hurt operators’ revenues in Slovakia, Romania, Bulgaria and Austria. Keeping Ukrainian transit alive is beneficial for all parties, except contractors of Gazprom.     Revenue of Slovak Eustream is already affected by higher utilization of the OPAL pipeline capacity recently permitted by the European Commission. In early January 2017, Gazprom and European operators reported record daily volumes of Russian gas delivered by Nord Stream. The flow reached 168 million cubic meters per day (mmcmd, at +20°C) compared with the average of 126 mmcmd of the first half of December[1]. Cold

This entry was posted in Europe, The Region and tagged , , , , , , , , , by Mikhail Korchemkin.

About Mikhail Korchemkin

Dr. Mikhail Korchemkin is the founder and managing director of East European Gas Analysis, a consulting company that specializes in cost-benefit and financial analysis of natural gas projects in the former Soviet Union. His previous experience includes performing numerous feasibility studies for the USSR Gas Ministry, predecessor of Gazprom. Prior to going into full-time consulting Mikhail taught at the University of Pennsylvania. He has also had visiting scholarships at Harvard University and Erasmus University in Rotterdam. Mikhail has consulted numerous corporate and governmental clients including ABN-AMRO Bank, Amoco, BP, British Gas, Chevron, Conoco, Ernst & Young, ExxonMobil, Gas Strategies, Gasunie, Neste Oy, Osaka Gas, OTA of the U.S. Congress, Ruhrgas, Shell, Statoil , Swedegas, Total, Vattenfall and The World Bank. He has acted as expert witness in arbitration cases concerning natural gas business in Russia and Eastern Europe.

The contours of the leaked decision of the EC following Commissioner Vestager’s meetings with top managers of Gazprom and Russia’s deputy minister of energy spells new peaks of national energy egotism in the European Union.   At the end of October, news broke of another Gazprom-friendly EC decision to free up to 80 percent of the capacity of the Opal pipeline, which connects the Nord Stream pipeline from Germany to Czechia. More than 10 billion cubic meters of natural gas will be added to the current Opal volumes, which in turn will have to be deducted from the transit flows in the Yamal pipelines in Poland and the gas transit system of Ukraine. Benefits and income generated so far in Eastern Europe will be shifted westwards to Germany and Western Europe,


  Following President Putin’s trip to Turkey and a sequence of publicity stunts, some of them jointly with President Erdogan, it has become clear that the Russian leader is engaging in another game of poker politics in a desperate attempt to make headlines, impress the international audience and sell more gas to Europe, bypassing EU directives and concurrently Ukraine. Although most of his plan is a deja vu, the decision to proceed with the intergovernmental agreement on Turkish stream and start maneuvers on the gas front from Istanbul contains a piece of novelty.   Most of the background remains the same – intentions, plans for the future, verbal rather than real streams – but the new moments are worth noting. Russia has changed several key elements in its approach to the ‘streams’ issue.


  Is it a beautiful dream? Russia and Greece will begin building a Greek extension of the Turkish Stream gas pipeline before the year is over and complete the job in 2019. This could be true if people trusted a memorandum the energy ministers of both countries signed in June. It seemed a foolproof solution that appeared eligible for implementation under the strict antimonopoly rules of the notorious Third Energy Package, which requires cross-border infrastructure within the EU to be independent from gas suppliers. Gazprom will neither own nor operate the future pipeline.   The ministers pledged to assist a proposed 50-50 joint venture of Russian and Greek investment banks, with initial Russian financing, to prepare a feasibility study and design a ‘South European Gas Pipeline’, a Greek segment of

This entry was posted in The Region and tagged , , , , , , , , , by Mikhail Krutikhin.

About Mikhail Krutikhin

Analyst and consultant on the oil and gas industry and politics in Russia; co-founder of and analyst with the RusEnergy consultancy in Moscow; editor-in-chief of The Russian Energy weekly newsletter. He previously served as editor-in-chief for the Russian Petroleum Investor and as associate editor for the Caspian Investor monthly magazines. Between 1972 and 1992, he worked for the TASS news agency in Moscow, Cairo, Damascus, Tehran, and Beirut, rising from correspondent to chief of bureau. Krutikhin graduated from Moscow State University majoring in Iranian linguistics, but later obtained his Ph.D. in modern history.