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Asia Today ISSN 1861-4604 Thursday, August 16, 2018

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The energy giant Gazprom seeking a way out

Problems are political and often arise as a result of an uncompromising position

Share on Facebook July 25, 2015, Reporter : Trend, Reader : 637

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Baku, Azerbaijan, July 25 By Maksim Tsurkov – Trend: A number of problems, recently faced by Gazprom, are forcing the company to look for new ways out and new solutions, even if this contradicts its own statements.

The energy market today is developing so that Gazprom is absolutely in no position where it was 15, 10 or even five years ago. Those times when the company dictated its conditions throughout Europe and its other markets are left behind.

The worthy competition of the Azerbaijani project “Southern Gas Corridor” finds its reflection in Gazprom’s activities, its projects and policies – something that can be seen even with naked eye.

After the failure of the “South Stream” project, which didn’t enjoy sufficient support in the EU, Russia announced a new stream – the Turkish one.

The “Turkish Stream”, delivering Russian gas to Turkey and Europe's borders, must become an alternative to the failed “South Stream”.

Simultaneously, Gazprom, as if emphasizing its firm intention, announced that in 2019 it will cease all the gas supplies to Europe through Ukraine, thus putting a kind of ultimatum to the countries in Central and South-Eastern Europe, which aren’t getting gas via the “Nord Stream”.

However, like its predecessor the “Turkish Stream” has faced a number of unforeseen problems.

Gazprom to solve them even attempted a bluff, announcing that it would begin construction of the “Turkish Stream” in the Black Sea in June, having no intergovernmental deal with Turkey, and no consent of the Turkish Energy Market Regulatory Authority (EPDK).

And without the EPDK’s consent neither the sale of oil and gas in Turkey, nor the transportation of hydrocarbons through its territory is possible.

As a result, a bluff failed. Gazprom had to break a contract with Italian Saipem, by paying a huge penalty, suspend some work to expand the capacity for the Turkish Stream in the south of Russia, as well as tender procedures.

The sides have not agreed on the gas price - a pressing issue in which Gazprom is not accustomed to yield to anyone. This adds fuel to the fire.

Moreover, the problems occurred in Turkmenistan, where Gazprom was charged with evasion of payment for Turkmen gas and in China, where the negotiations on the Altai pipeline are greatly hampered.

As a result, Gazprom had to find a way out of this situation. First, Gazprom CEO Alexey Miller said that the talks will be held with the Ukrainian partners to extend the transit agreement for the period after 2019. Then it was reported that Gazprom had an idea of ​​the Nord Stream expansion.

It seems that Gazprom sees the solution to its problems in the Russian proverb: "A bird in the hand is worth two in the bush". It is interesting that almost all these problems are political and often arise as a result of an uncompromising and principled position of the Russian monopolist. Maybe it is time to make compromises?

Maksim Tsurkov is Trend Agency’s staff journalist, follow him on Twitter: @MaksimTsurkov

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