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    June 24, 2015

    Putin's Gas Pincers



    June 24, 2015

    Putin's Gas Pincers

    By Crimson_Alter

    Translated from Russian by J.Hawk

    Judging by the results of the gas negotiations at the St. Petersburg Economic Forum, Germany wants to become the main transit country for Russian gas going to Europe by prying Ukraine's representatives away from the "Russian pipe." The multi-step deal between Berlin and Moscow that is gradually coming into focus will greatly discomfort Washington, Kiev, and, possibly, Ankara.

    The signing of a memorandum on another northern maritime pipeline which already was dubbed North Stream 2 by the journalists, caused a storm of misunderstanding among couch experts who came to the conclusion that Russia simply doesn't have enough gas to fully use both the Turkish Stream and the proposed North Stream expansion. But that's exactly the point! Gazprom doesn't need to fill up both pipelines in the short term. It's much more advantageous to have a reserve capacity which will protect against dependence on one transit country or direction. The "competing pipeline" tactic is already bearing fruit:

    Turkish Stream moves forward

    The memorandum on North Stream 2 deprived Turkey of a hypertrophied sense of its own importance, and there are reasons to believe that now work on Turkish Stream will move faster and will not be accompanied by unnecessary statements that Crimean Tatars are being oppressed in the Russian Crimea.

    If we look at the map of Europe, we see that Putin is taking the EU in "gas pincers" which confounds the eternal US dream of separating the EU from Russian gas. The billions of dollars invested in the Maidan were to a great extent an investment in ending gas trade between Russia and EU. But now it turns out that we'll be able to forget about that US plan in a few years.

    It's worth reminding that the US was dead-set against the very idea of Soviet gas supplies to Europe, attempting to undermine the Soviet-German "gas for pipe" deal which already in the '70s was called the "deal of the century." Turkish Stream and North Stream-2 construction will become a huge problem for the "gas deterrence" strategy due to the absence of a single vulnerable point that, when put under pressure, would sharply limit Russian gas deliveries to the EU. No Macedonian Maidan or targeted sabotage will help, and closing off all the alternative routes is too much of a task even for the US.
    The list of firms which signed up for the North Stream expansion is very indicative. It's hard to assume imagine that the flagship of the German energy industry, the firm E.On, signed up without corresponding political support. It's even less probable to assume that the Ango-Dutch Shell signed up without similar political cover. It's clear that the Anglo-Dutch oil-men have a finely refined political sense and a corresponding political cover, especially if one considers the company's history.  It's enough to remember that Shell is the company which explored for oil in the Russian Empire under the Batum Oil Industrial and Trading Society. Given that the route of the new Baltic pipeline will run along the North Stream route, European Commission has very limited ability to prevent it from being built. All the necessary permits already exist.

    The only possible obstacle is the need for a permission from the German energy agency to connect to the German gas transit system, but E.On is all but certain to obtain it without particular effort due to its huge political influence in Germany.

    Once North Stream-2 is completed, Germany will be able to take Ukraine's niche and thus become the main transit country for Russian gas going into the EU. Yes, yes, that's why Ukrainians demonstrated on the Maidan. Of course, nobody warned them about it, but that's how it goes. We are finally seeing in the public sphere the real reasons why Gazprom Deputy Director Aleksandr Medvedev made the by-now famous announcement:

    "Once the transit contract with Ukraine expires, there will be neither an extension nor a new contract, under any circumstances. There will be no more Ukrainian transit due to the economic, commercial, technological, investment, and political risks, even if the Sun were to change places with the Moon."


    It would seem that in the near future the EU will be serviced by two pipelines, northern and southern. The deadline is understandable: 2019. Until the Kiev regime problem is not solved, EU will have to pay for Ukraine's gas simply in order to ensure its own energy security and not freeze in winter. Therefore "Putin's gas pincers" are already having a positive effect on EU politics, and it can't help but be a reason for satisfaction.

    J.Hawk's Comment: This, too, is part of the "peacemaker" strategy that Ishchenko is talking about. Because if the Strelkovites had their way and the Russian Army invaded Ukraine outright, marching on Kiev and effecting a regime change of its own, would there be either a Northern Stream 2 or a Turkish Stream? It just doesn't seem likely. Russia might have found itself under Iran-style sanctions and the EU would have scrambled to find other energy sources. Instead, slowly but surely, Kiev is becoming less and less of a priority for the EU.

    Whether Ankara minds is another matter. Turkish Stream might also ultimately be supplied by Iranian or even Caspian natural gas, though the geopolitics of that are not very encouraging. But that Germany stands to become the main transit hub for Russian gas may have been part of some deal concerning the future of Ukraine that we don't yet know about.


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