Ukraine Will Not Be Harmed Economically By Nord Stream Launch

KIEV, Ukraine -- Interfax-Ukraine cited Mr Valentyn Zemliansky independent Ukrainian expert on energy matters as saying that Ukraine will not suffer economic losses due the launch of the Nord Stream gas pipeline, since the project is redundant considering existing Gazprom capacity for the transit of gas to European Union countries and Turkey.

He said that "Nord Stream can be considered especially as a geopolitical project aimed at resolving Russia's strategic tasks in the post-Soviet space, mostly in relation to Ukraine and Belarus."

He added that the launch of the first Nord Stream line will not affect the amount of Russian gas transported across Ukrainian territory.

He also said "Judging from yesterday's statements by Gazprom representatives regarding contracting for new gas volumes and sources for filling Nord Stream, the conclusion can be drawn that the new route will in the near-term perspective be providing gas only to two EU countries under new contracts in an amount of up to 25 billion cubic meters per year."

Mr Zemliansky said the Yuzho-Russkoye deposit and its estimated reserves of more than 800 billion cubic meters of gas, which Gazprom is developing along with German companies and which last year reached designed production capacity of twenty-five billion cubic meters per year, has been selected as the main source of gas for Nord Stream.

He said that factoring in the investment component and the cost of transporting gas via Nord Stream will similar to what transiting gas through Ukraine and Slovakia costs.

Mr Zemliansky said "Most likely, the EU will be considering increasing the volume of gas transit through Nord Stream as an alternative to the Ukraine route only in the event conflicts arise between Russia and Ukraine."

In his view, he said, in such a situation it is probably not worth anticipating that after the laying of the second Nord Stream line in 2012 the project will quickly reach full pumping capacity of 55 billion cubic meters per year.

He added that EU policy for cutting the use of energy resources including gas will also have an impact which could tell negatively not only on Nord Stream filling volume but also on Gazprom exports to EU countries generally.

Source: Interfax