Gazprom and Austria’s OMV discussed on July 8 in Berlin further actions within the Russian gas monopoly’s Nord Stream II gas pipeline project, particularly setting up of a joint venture to be responsible for the gas pipeline design, construction and operation. The pipeline is in line of Gazprom’s strategy to completely bypass Ukraine by 2019.
Gazprom CEO Alexey Miller said at a meeting with OMV CEO Rainer Seele that the target markets for the Nord Stream II gas are the same as for Nord Stream I, noting that up to 15% of all the gas transported via the Nord Steam II flows to the United Kingdom.
Miller and Seele also touched upon the acquisition of a stake in the joint venture by OMV, which is a major partner of Gazprom in Austria.
On June 18, Gazprom, which owns 51% in the project to build Nord Stream II, Germany’s E.ON, Anglo-Dutch Shell and OMV signed the Memorandum of Intent stipulating the construction of two strings of the Nord Stream II gas pipeline with an aggregate annual capacity of 55 billion cubic metres, to be laid from the Russian coast to the German coast via the Baltic Sea. The first two strings of the Nord Stream pipeline have been operational since 2011 and 2012 respectively, with the annual gas capacity of 55 billion cubic metres.
Separately, Gazprom discussed with BASF the possibility of the German firm participating in Nord Stream II. The Russian firm said it had met BASF officials in Berlin on July 7, but did not give further details.
BASF oil and gas subsidiary Wintershall has previously said in June that it is keeping faith with its Russian investments and wants to do more there, despite tense EU-Russian relations over Moscow’s annexation of Crimea and its role in Eastern Ukraine.
Alexei Kokin, a senior oil and gas analyst at UralSib Financial Corp in Moscow, told New Europe on July 8 that from the very start Turkish Stream was a very questionable project. Nord Stream has always been easier from the regulatory point of view, he added.
“Anything beyond the first stage of Turkish Stream has been put on hold so the southern pipeline will probably be limited to the 16 bcm per annum line for the time being. My guess is that’s why Nord Stream has become the number one priority because Nord Stream itself is exempt from EU rules,” Kokin said.
He noted that Turkish Stream would be built into some minimal configuration. “It won’t necessarily extend into the European Union and the reason is pretty clear: there is no agreement with Turkey,” he said, adding that Gazprom and Turkey’s Botas disagree over the gas price.
On top of that the Greek crisis doesn’t make things easier. “Definitely the whole Greek turmoil is probably making things a bit difficult. It’s hard to negotiate. Any long-term commitments will be difficult to obtain from either from Greece or the European Union,” Kokin said.
He also said Gazprom has enough extra production capacity in Yamal in northwest Siberia to supply 55 billion cubic metres to Nord Stream II. “That’s all doable. The only big question is how Europe’s distribution system will work,” he said.
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