Why the 7 Arguments Used to Justify Nord Stream II are Wrong
Advocates of Russia’s Nord Stream II pipeline
rely on seven justifications to explain their support
for the project. Intentionally or inadvertently, the backers of Nord Stream II use justifications that
are based on incorrect assumptions or outright disinformation. In order to objectively evaluate the
need for Nord Stream II, these flawed justifications must be identified and corrected.
#1:
Ukraine’s
gas transit system is in good technical condition and does not require massive
external investment. Russia has run numerous stress tests to prove the reliability of
Ukraine’s route.
Naftogaz meets all nominations made by Gazprom for transit across Ukraine
fully in line with the contract, and this is the best evidence
of the system’s good technical shape.
For many years, Naftogaz updates this data online on a daily basis. In its turn, Gazprom has never
provided proofs of any alleged technical failures of gas transit across Ukraine.
In January 2009, Russia made a political decision to halt gas supplies to Europe aiming to force
favorable conditions for Gazprom’s business in Ukraine and to promote Nord Stream in the EU.
Ukraine provided some of its own gas to cover critical gas shortages in certain CEE countries when
Russia stopped gas flows completely.
In early March 2018, Gazprom attempted to create another gas crisis in Europe, by failing to supply
prepaid gas volumes to Naftogaz and reducing pressure on the Russian side of the gas transmission
system to 20% below the contractual norm
–
all in the middle of a severe cold spell in Europe.
Under these extreme conditions created by Russia to promote Nord Stream II, the Ukrainian gas
transit system has performed impeccably, and Naftogaz fulfilled
all Gazprom’s nominations.
The Ukrainian system is extremely reliable, as its performance shows. It can benefit from some
modernization to boost efficiency but its maintenance and modernization needs are only $100-300
million per year to ensure the transit capacity of 110 bcm/y, booked by Gazprom. The best way to
secure this funding is through ensuring the system is used and generates revenues.
#2: Nord Stream II’s only onshore extension is directed southward and will not provide
Western Europe with a replacement for falling gas deliveries from the Netherlands and
Norway.
The Nord Stream II pipeline will only be continued to the south via the European Gas
Pipeline Link (EUGAL) and it will not generate additional capacity for Western Europe. Nord
Stream II is merely redirecting flows from existing routes in Central and Eastern Europe. It also
does not provide access to any new gas sources.
#3: Europe has available unused transit capacity of 55 billion cubic meters (bcm) and
doesn’t
need Nord Stream II’s additional capacity.
The Ukrainian gas transit system has a capacity of
146 bcm. In 2017, it transited 93.5 bcm, and there is nearly 55 bcm spare capacity in the system.
Nord Stream II costs billions to build but will merely replicate
Ukraine’s
existing capacity in order
to carry the same gas to the same clients in CEE and Southern Europe, but through a longer
route. There is no commercial logic to the project.
Moreover, advocates of Nord Stream II force the EU to sacrifice Ukraine’s 146 bcm flexible
onshore capacity in exchange for a risky, technically fragile offshore pipeline of 55 bcm. As a
result, if Europe’s gas demand increases by 2030, as Gazprom
suggests, there will be no Ukrainian
gas transit system to help it meet this new demand.