Monday, March 27, 2023
 
 

US’ Russia sanctions undercut Gazprom’s Ukraine tariffs

EU investments in Nord Stream-2 in harm’s way

- Advertisement -

The new US sanctions against Russia reportedly create the risk of weakening Russian gas monopoly Gazprom’s position in talks with Ukraine on tariffs for gas transit, Moody’s rating agency has said.

US President Donald Trump in early August signed a law that envisions the expansion of a number of sanctions against the Russian economy.

“The sanctions law comes as Gazprom’s gas transit agreement with Ukraine expires at the end of 2019, and risks weakening the company’s negotiating power as it looks to strike a new agreement. A weaker negotiating stance could result in Gazprom incurring higher transit expenses because of higher transit fees and/or volumes than its initial estimates,” the statement said, cited by Reuters.

Moody’s said the new US sanctions law has the potential to challenge Gazprom’s ability to structure the Nord Stream-2 pipeline construction on a project-finance basis, as the company had initially planned, replacing part of the debt it borrowed, including from its partners, with longer-term loans in a cost-efficient manner.

This law exposes Gazprom’s partners, investors, lenders and contractors to sanctions and risks that would delay the completion of both Nord Stream-2 and Turkish Stream projects, Moody’s said.

Russia and some European states, including Germany, have said that US sanctions against Russia could harm European companies’ interests in Nord Stream-2.

In the latest effort to deal with US sanctions, Russian President Vladimir Putin nominated former German chancellor Gerhard Schroeder to the board of Russian oil giant Rosneft as an independent director, according to a government decree published late on August 11. Schroeder is currently the chairman of the shareholders’ committee of Nord Stream AG. Schroeder has criticised moves to impose sanctions on Russia.

Meanwhile, Gazprom is moving ahead with plans to build the Nord Stream-2 and Turkish Stream pipelines that would lessen the Russian gas monopoly’s reliance on Ukraine as a gas transit state.

Igor Mantsurov, director of the Research Institute for System Statistical Studies, told New Europe that one of the most important requirements for Ukraine from the European Union was secure gas transit from Russia via its territory for European consumers according to contract conditions. “And Ukrainian government managed it successfully, although climatic and economic conditions were unusually harsh for the country,” he said.

“Ukraine secured natural gas flow to EU, effectively using its gas transportation network and storages to increase the supply in winter, at the time of highest consumption, when Russian suppliers fail to keep the necessary pressure of the transit gas flow,” added Mantsurov, who is a member of Ukrainian Academy of Sciences.

“High reliability of Ukrainian gas transportation system and solid policy of its government made unnecessary the construction of new pipelines bypassing Ukraine, because the usage of the existing Ukrainian network is much more profitable and could be omitted only by the political reasons,” Mantsurov argued.

follow on twitter @energyinsider

- Advertisement -

Subscribe to our newsletter

Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

Latest

Africa’s porous borders promote transnational crimes rather than deeper integration

For positive continental regimes to succeed, there must be both conscious and concerted efforts, as well as political will, from all states to help eliminate transnational crimes while fostering integration across the whole of Africa through trade.

Kazakhstan’s new parliament could usher in green energy, rare earth investments

Kazakhstan held internationally monitored elections for the Mazhilis, the...

EU-Turkey earthquake relief conference: Time to get serious

The European Union is hosting a reconstruction conference in...

Cambodia’s current government is the face of tropical Fascism

There is no hope that the authoritarianism that the world sees in places like Russia, China and Cambodia can ever be interpreted as a peaceful and benign phenomenon, or that it should be accepted by an implicit racist or discriminatory assumption that some cultures just don’t have a democratic tradition and aren’t quite capable of ever developing one.

Don't miss

Africa’s porous borders promote transnational crimes rather than deeper integration

For positive continental regimes to succeed, there must be both conscious and concerted efforts, as well as political will, from all states to help eliminate transnational crimes while fostering integration across the whole of Africa through trade.

Kazakhstan’s new parliament could usher in green energy, rare earth investments

Kazakhstan held internationally monitored elections for the Mazhilis, the...

EU-Turkey earthquake relief conference: Time to get serious

The European Union is hosting a reconstruction conference in...

Cambodia’s current government is the face of tropical Fascism

There is no hope that the authoritarianism that the world sees in places like Russia, China and Cambodia can ever be interpreted as a peaceful and benign phenomenon, or that it should be accepted by an implicit racist or discriminatory assumption that some cultures just don’t have a democratic tradition and aren’t quite capable of ever developing one.

Energy supply diversification out of Russia’s orbit is a top priority for Bulgaria

Bulgaria intends to diversify its energy resources, including supplying...

Kazakhstan’s new parliament could usher in green energy, rare earth investments

Kazakhstan held internationally monitored elections for the Mazhilis, the lower chamber of the Kazakh Parliament, on March 19, following major constitutional reforms, which most...

Energy supply diversification out of Russia’s orbit is a top priority for Bulgaria

Bulgaria intends to diversify its energy resources, including supplying the country’s main refinery in Burgas - the largest in the Balkans - with non-Russian...

Georgia has shown the world that a Kremlin project can be defeated

Over the past few days, the world’s attention was on Georgia. We saw massive protests fueled by anger, concerns and fear, and eventually, we...

Putin’s New START withdrawal has broad implications

Vladimir Putin continues to persuade Russians that the West provoked his imperialist war of aggression against Ukraine. His announcement that he would no longer...

Energy-strapped Germany sets ambitious 30 GW offshore wind target by 2030

Germany, which has been struggling to fill its massive energy gap following Russia’s invasion of Ukraine and reduction of natural gas deliveries, is planning...

Providing Ukraine with advanced Western fighters is a logical step towards battlefield success

While Ukraine may have weathered the storm of Russia’s initial onslaught and retaliated with a force and determination largely thought to have been beyond...

Eclipsed by Ukraine concerns, Blinken visits Turkey and Greece

After attending the Munich Security Conference on February on 17-19, US Secretary of State Antony Blinken departed for a brief regional mission to Turkey...

Georgia, Romania mull Black Sea undersea power cable to supply CEE Europe

Georgia, which is a transit country for oil and gas routes, is spearheading efforts to launch a very ambitious project that would create a corridor for green energy from the Caspian to the Balkans and CEE.