Despite opposition last year from anti-trust authorities in Poland, Russia is not backing down. Energy giant Gazprom insists it will build the Nord Stream II pipeline through the Baltic Sea even if it has to do it alone. The pipeline will sit right beside the Nord Stream I pipeline that already exists. And if it gets built, Ukraine is convinced it’s future as a transit line for Russian gas into Europe is finished.
“As it is, Russia is moving its traditional Ukraine transit to Nord Stream I,” says Andriy Kobolyev, CEO of Naftogaz in Ukraine. “If you look at the numbers on gas consumption in Europe out to 2020, it is obvious to me that if we get a Nord Stream II and if we get the expansion of Turkish Stream, which is already happening, with two pipelines there now instead of one, then that will mean Ukrainian transit of Russian gas into Europe with equal zero.”
Naftogaz is Gazprom’s Ukrainian door to Europe. Ukraine isn’t currently importing Russian gas for its own market’s consumption. But it is receiving payment for shipping Gazprom’s gas through pipelines that cut across the full length of the Ukrainian landscape. The money received from Russia to pay for that transit is equal to about 10% of the Ukrainian budget, according to government estimates. If it vanished, it would be a big problem for the Ukrainian economy.