Nord Stream Deflating Ukraine?

HOUSTON, USA -- Ukraine's influence as a natural gas transit state declined with the start of the Nord Stream pipeline to Europe, an analysis concluded.

The Nord Stream natural gas pipeline consortium started pumping so-called buffer gas through the first line of the twin pipeline through the Baltic Sea to Germany this week.

Ukraine is trying to negotiate a better deal for the natural gas it gets from Russia.

Pipelines in Ukraine are used to transit about 80 percent of the natural gas Russia sends to Europe.

Acrimony between the countries, however, makes the route politically risky.

Russian energy company Gazprom in 2009 shut off gas supplies to Ukraine, and subsequently to Europe, briefly because of spats with Kiev.

Stratfor, a Texas intelligence company, said that with Nord Stream operational, Ukraine loses much of its bargaining strength.

"Ukraine has often depended on its status as a transit state for Russian natural gas traveling to Europe," an analysis from Stratfor read. "The Nord Stream pipeline has taken much of that leverage away from Kiev."

Kiev has looked to its reserves of shale gas as a potential opportunity to break its link with Russia.

Royal Dutch Shell last week signed an $800 million shale deal with Kiev and may look at liquefied gas options with facilities along the Black Sea coast.

Nord Stream is part of Russia's plans to diversity its transit options.

Gazprom said this week that South Stream, the southern counterpart to Nord Stream, is proceeding as planned.

Source: UPI