Publication: Monitor Volume: 5 Issue: 39

Ukraine’s Oil and Gas State Committee and its Romanian counterpart have signed an agreement to lay a connecting pipeline from Khust in Ukraine’s Carpathians to Satu Mare in Romania’s Transylvania. The 60-kilometer link will plug Romania into the main line which carries Russian gas across Ukraine to Central and Western Europe. The Khust-Satu Mare link will enable Russia’s Gazprom to pump 4 billion cubic meters of gas annually to Romania, thereby increasing Ukraine’s role as a transit country for Russian gas (Eastern Economist Daily (Kyiv), February 22, 25).

Earlier this month, Ukraine made public its plan to add a parallel pipeline to the southbound main line which carries Russian gas to the Balkans. The addition, to run from Ananyiv to Izmail on the Romanian border, would boost Ukraine’s capacity to transit Russian gas to southeastern Europe (see the Monitor, February 9). Kyiv also plans to raise the transit fee per 1,000 cubic meters for each 100 kilometers from US$1.09 this year to US$1.75 next year. The intention is to deduct pipeline construction costs and the transit fees from Ukraine’s arrears to Gazprom, which are currently in excess of US$1 billion.

Gazprom chairman Rem Vyakhirev told European importers last week that his company would like to reduce, rather than increase, export to and transit via Ukraine, because of the latter’s indebtedness and its alleged practice of siphoning off Russian gas destined for third countries. Gazprom hopes to maximize transit via Belarus, using a new pipeline which will link Siberia’s Yamal gas fields to Germany and other West European countries. That line’s Belarusan section is currently under construction. Unruffled, Naftohaz Ukrainy officials responded that the Belarusan section will take a long time to complete (an allusion to Gazprom’s serious cash problems), and that the line’s planned annual capacity of 40 billion cubic meters, mostly reserved for Yamal gas, might only accommodate an insignificant portion of the 120 billion cubic meters now being pumped annually from other Russian gas fields via Ukraine (Itar-Tass, February 20).

In the Balkans, Gazprom would like to bypass Ukraine by laying the “Blue Stream” pipeline from Russia directly to Turkey on the bottom of the Black Sea. That Russian-Italian project, however, seems likely to be preempted by the American-led project to supply Turkey and the Balkans with gas from Turkmenistan (see the Monitor, February 23). The likely cumulative effect of these developments will be to consolidate Ukraine’s role in the short and medium term as an indispensable transit country for Russian gas. And that role will keep Kyiv’s hand strong in negotiating with Gazprom over debt settlement terms and the alleged siphoning problem. –VS