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Nord Stream Pipeline Could Be A Game-Changer For Ukraine, Belarus

The Nord Stream construction site in Portovaya Bay near Vyborg in Russia
The Nord Stream construction site in Portovaya Bay near Vyborg in Russia
By RFE/RL
Not everyone was clapping and cheering on November 8 as Western European leaders and Russian President Dmitry Medvedev met in Lubmin, Germany, to mark the opening of the first part of the Nord Stream natural-gas pipeline.

When completed late next year, the 1,224-kilometer, $10 billion pipeline will carry 55 billion cubic meters of Russian gas directly to Western markets each year. It will bypass transit countries like Ukraine and Belarus that rely on the revenues from transit fees and also benefit from the political leverage that comes from being part of Europe's energy equation.

Now those revenues and that leverage could be sharply reduced. Speaking in September, Medvedev emphasized that Nord Stream would "reduce risk" by circumventing Belarus and Ukraine.

Belarusian energy analyst Stanislau Husak told RFE/RL's Belarus Service that the impact on his country and on Ukraine could be devastating.

"Russia needs Nord Stream to make both Belarus and Ukraine into colonies of the 18th-century type," he said. "The single customs area, Nord Stream, and the like are intended only to reduce the ability of Belarus and Ukraine to become truly independent. It is necessary to realize that all this is being pursued within the framework of a single policy -- the policy of colonizing this region."

The exact scope of Nord Stream's impact on Russia's neighbors remains to be seen. With Germany and other Western European countries turning away from nuclear power in the wake of Japan's Fukishima disaster, the volume of Europe's demand for Russian gas in the coming years is hard to forecast.

Before Nord Stream, about 80 percent of Russian gas heading to the EU passed through Ukraine and most of the rest went through Belarus.

New Leverage For Moscow

One consequence of the project could be to give Moscow new leverage over Minsk and Kyiv by shifting the burden of Nord Stream's impact back and forth between the two countries according to the Kremlin's political aims.

Russian state-controlled energy giant Gazprom, which provides the gas for Nord Stream, has said it intends to divert about 20 percent of the gas currently transiting Ukraine through the new pipeline. Kyiv stands to lose some $700 million annually in transit fees.

Nonetheless, Ukrainian energy analyst Valentyn Zemlyansky maintains that the Ukrainian transit route will remain essential despite the new pipeline.

The Nord Stream natural gas pipeline capacity
The Nord Stream natural gas pipeline capacity
"Ukraine will always remain the main route, for example because it has this advantage over all alternative routes even over the Belarus route: underground gas-storage facilities," he says. "Underground gas storage in the winter maintains the necessary pressure in the system in order to be able to provide further transit [to European countries]."

Analyst Volodymyr Saprykin agrees, telling RFE/RL's Ukrainian Service that since Nord Stream's supply is intended primarily for Germany, which is currently supplied through Belarus and Poland, the harm to Kyiv should be minimal.

'Not An Economic Issue But A Political One'

Belarusian energy expert Ales Mekh also thinks that the brunt of Nord Stream's impact will be felt in Minsk.

He fears that Moscow could use the threat of reduced gas transits through Belarus to ratchet up pressure on Minsk to sell key economic assets to Russian investors.

"It was a crazy idea on the part of the Belarusian government to sell even a 50 percent stake in [Belarus's natural-gas transit company] Beltranshaz," Mekh says. "Because gas distributed through the Beltranshaz network accounts for 85 percent of the energy supplied to Belarusian enterprises. In other words, those in control of Beltranshaz are in control of all the enterprises in our country. It is not just an economic issue -- it is a political issue. It is an issue of survival for the country, an issue of its independence."

Mekh adds that the loss of revenues is significant for Minsk, but that losing its status as a transit country is worse. "The country is losing some of its possibilities," he says.

But another Belarusian economist, Syarhey Chaly, believes Nord Stream was always "more political than economic." He argues the project is more dangerous to Ukraine than to Belarus.

"I think that Nord Stream will be a threat to Ukraine and not to Belarus because Russia can't find any shorter and cheaper transit [than through Belarus]," he said. "And the Russians now think that, having acquired a 50-percent stake in Beltranshaz, they have relatively guaranteed conditions. And they haven't been able to achieve this in Ukraine, so to a large extent this is a threat to Kyiv."

written in Prague by RFE/RL correspondent Robert Coalson on the basis of reporting by RFE/RL's Belarus and Ukrainian services
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Comment Sorting
Comments
     
by: Eugenio from: Vienna
November 08, 2011 19:42
What happened to Nabucco? It's been a while since I've not heard of it :-).
In Response

by: Boris from: London
November 09, 2011 07:50
Europeans are still talking about NABUCCO, then they will study it, then start talking again. Its been like this for last 15 years. Putin and Shreder implemented NORD STREAM in just few years. Which is much more difficult pipeline than NABUCCO.

Europians will talk again and try to decide, then talk again, then study....
Then they will find that Putin has ressurected the Soviet Union, and they will need his permission to construct Nabucco.... ridiculous

by: Anonymous from: USA
November 09, 2011 02:19
I'm waiting for the day Russia demands more concessions from Germany in order to continue receiving gas through Nordstream....such as Russian military bases in Germany, no WTO cases against Russia (after they join), no human rights cases, more access to Germany's defense industry, etc. I think the Germans have sold themselves short in this whole process. It will be interesting to see what happens if Poland develops shale gas and can sell it cheaper than Gazprom.

by: Jack from: US
November 09, 2011 03:00
Who tried to stop the progress? - US government and its slave satellites
In Response

by: Anonymous
November 09, 2011 16:17
Russia only uses progress for political purposes---to enslave others.
In Response

by: Johann from: USA
November 14, 2011 23:40
Russia is trying to Bully, Belarus and Ukraine. Like China is trying to Bully, my birth country Iceland, and wants to buy 6 percent of all landmass of Iceland. China is also trying,to get premanant Navy base there. The Chinese are alredy funneling " Money ", into one political party there !!!

by: charles from: ladd
November 10, 2011 04:04
Natural Gas Europe has an article with a similar tone in respect to the impact of Nord Stream on Poland. http://www.naturalgaseurope.com/nord-stream-a-view-from-poland-3421

by: Anony
November 10, 2011 20:53
Does germany or japan really need US navy to protect their energy lines? Russia will soon have direct pipes to 3 of the 4 major economic engines of the world: Japan, Germany, China.
In Response

by: Anonymous from: USA
November 11, 2011 10:39
Wrong! China will not make itself a slave to Russian oil and gas. The Russians and Chinese still cannot agree on a price for gas, after five years of negotiations! China, like the USA, won't let Russia dictate its energy policy. China didn't take orders from a powerful USSR in the past, and won't take orders from a weak Russia today. They act in their own interest.

by: Anony
November 11, 2011 16:09
Don't you worry about China. They already have won the central asian great game. Pipelines already exist which transport caspian energy to China, safe, secure and far from the watchful eve of the US navy. No chance of a blockade, no transit fee or shipping costs. Nothing beats a pipeline! The biggest shocker will be when Iran builds a pipeline through the caspian to hook up with the china pipeline network. This is the only reason why russia allowed China into central asia. The deal is a simple one: once iran is in, iranian oil/gas go to China, central asian oil/gas goes to russia. China with the money outbids anyone from getting into central asia while russia uses its proxies to play dirty and keep everyone out. And to top it off, once ESPO pipeline gets into top gear, south korea and japan will also not require any naval protection for their energy
In Response

by: Anonymous from: USA
November 15, 2011 01:59
Your comments make no sense. China won the Great Game in Central Asia but Russia allowed them to? LOL! Asia will be getting LNG not more pipelines. The US Navy will be ever more watchful, go here:

http://www.reuters.com/article/2011/11/13/gazprom-lng-idUSL5E7MD05220111113

by: Edward J Schumann from: Key Largo, Florida
November 18, 2011 17:27
Very good article by Radio Free Europe @Radio Liberty, Radio Liberty should report more on Russi which is the problem in the Region and not keep attacking Belarus and Lukashenko on these silly unimportent Polish issues . Stop doing the dirty work for Poland ,which is only trying to sture up ethnic tensions like they are doing in Lithuania. By the EU following Polish demands they will only push Belarus into Russian control of its key assets and political control of the Region.
In Response

by: Jim Smith from: Newport Beach, California
November 22, 2011 04:50
Wrong. Russia and Belarus are the problems in the region, both aim to maintain dictatorships. Poland is by far the strongest democracy in the region. Anathema to Putin and his Belarussian puppet.

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