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#3' 2005 print version
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GAS PIPELINES WITH GREAT PAST AND BIG FUTURE
"Gas disputes" periodically happening between Ukraine and Russia as well as searches for alternative routes of transiting gas from territories of CIS countries have been, to a large extent, pre-determined: it is impossible to fairly divide what cannot be divided in principle, namely, the common gas transport system. Analyst Anna Korovina is suggesting to consider in more detail this gigantic pipeline system, which today provides the basis for an efficient cooperation of Russia with European importers of natural gas and in future promises even more impressive opportunities for this business.




T
here will be more heritage, if it is not divided
The operating trunk gas pipelines of all (without exception) post-Soviet states were set up as units of the common network of the USSR’s gas supply. And so far their excessively close interrelationship contradicting the new political realities has caused problems in managing gas flows.
Russia’s position is the preferred one. The bulk of gas pipelines that connect gas transport systems of CIS countries runs via its territory. Because of this factor all other states are hardly pressed on the market of natural gas. For example, Byelorussia is now trying to reduce its dependence on Russian supplies through a possible arrangement of gas export shipments from Turkmenistan but its attempts can also fail, if Russian interests are not taken into account. It is impossible to supply gas from Turkmenistan to Byelorussia bypassing Gazprom.
At the same time, the whole gas transport network may be regarded as a pre-requisite to expanding the cooperation between CIS countries. Ensuring reliable supplies of natural gas for domestic consumers, developing transit to international markets and investment projects related with it provide sufficient arguments in favor of working out joint coordinated actions. Investments in long-term contracts for gas supplies will attract new orders for engineering and metallurgical products of CIS countries, will contribute to the growth of employment and earnings.
At present, many parts of the gas transport system are considerably worn. All main components require modernization. It has to do with technical re-equipment of compressor stations, reconstruction of linear parts of gas pipelines for prolonging their service life, introduction of advanced methods of diagnostics, control and management of gas flows.

Gas flows go from Russia but it has not always been the case

Today’s direction of gas flows is from Russia to Ukraine and, further on, to Europe. It seems that it has always been so. But it is not right. Half a century ago Russia did not have capacities to produce natural gas sufficient to meet its own needs. This was reflected in developing the gas pipeline system. In the 1950s trunk pipelines were built for bringing gas from Ukraine to Russia’s central regions. In the 1960s gas transport systems were constructed that connected Russia with gas fields in Central Asia.
One of the main directions is the Central Asia-Center gas pipeline. It goes via the territories of Turkmenistan, Uzbekistan, Kazakhstan, Russia and, then, gets to Ukraine. Today, this pipeline is physically and morally outdated. What is more, its capacities are not sufficient for implementing the 25-year contract between Turkmenistan and Russia for gas supplies, under which annual volumes of supplies will go up to 80 billion cubic meters starting in 2009. In order to fulfill contract obligations, Russia’s Gazprom intends to build up the system of transporting gas in its section. Increasing supplies will also require an expansion of the Uzbekistan and Kazakhstan sections, capacity of which at present amounts to between 40 and 50 billion cubic meters year-on-year. This will demand large investments. For example, the project of building up Kazakhstan’s section to 90 billion cubic meters a year is estimated at $1.5 billion. The outlook for reconstructing this gas transport system is also a matter of concern to Ukraine, which would like to increase purchases of Turkmenistan’s gas.
In the nearest years Kazakhstan is planning to considerably raise volumes of natural gas production. Taking into account the growth of Russia’s purchases of gas in Turkmenistan and Uzbekistan, it will require to coordinate actions of the Russian and Kazakhstan sides on increasing capacities of the Central Asia-Center gas pipeline. At the same time, there is a new moment. Kazakhstan has already repeatedly expressed its desire to construct pipelines bypassing the Russian territory. One of the options of doing it is via Turkmenistan to the South.

As before, the largest projects are aimed at Europe

As far as developing gas transport systems is concerned, Russia is not going to lose its priority and the country intends to strengthen its leadership even more.
The largest project is the Yamal-Europe gas pipeline. It is designed to increase supplies of Russian gas to countries of Western Europe. Besides, it is assumed that precisely this trunk will help completely satisfy requirements of the Kaliningrad region removed from Russia’s mainland by countries, which have become members of the EU. Depending on consumer’s demand, construction of the second stage of the Yamal-Europe gas pipeline is also an option.
At the same time, there are preparatory works underway for constructing the North-European gas pipeline. This fundamentally new route will let Russia diversify export flows directly connecting its system with the all-European one. The route will go via the water area of the Baltic Sea from Vyborg to the coast of Germany (the area of the town of Greifswald). The plans provide for construction of sea bends to supply gas to consumers of Finland, Sweden, Great Britain and other countries. The absence of transit states on the way of this gas pipeline reduces state-related risks as well as expenses on transporting and, at the same time, increases supplies’ reliability.
It is worth noting the development of the Russian gas pipeline system in the southern direction. The option of the direct access to consumers in Turkey has already been implemented: bypassing the third countries the Blue Stream gas pipeline goes across the water area of the Black Sea. This unique structure consisting of two land and one sea sections has no match in the world. Several thousand specialists from Russia, Italy and Turkey took part in its construction; materials and equipment produced in Italy, Germany and Japan were used. Gazprom’s main partner in constructing the Blue Stream was Italy’s ENI, which has a major experience in building sea gas pipelines and which has the world’s largest pipe-laying fleet.
The gas pipeline is an addition (and, to some extent, an alternative) to the operating gas transport corridor from Russia to Turkey via territories of Ukraine, Moldavia, Rumania and Bulgaria.

The gas knot that cannot be undone

The region of Central and Eastern Europe is an important connecting link in the developing system of Europe’s pipeline transport because it happens to be on the way of main flows of oil and natural gas from Russia to the EU. Via territories of Poland, Slovakia, Czechia and Hungary gas goes to countries of Western Europe and, then, to Greece and Turkey through Rumania and Bulgaria. The main part of this gas transport network was constructed in 1967 through 1987. During those years 8 gas pipelines were constructed; among them there were such powerful gas trunks as Soyuz, Urengoi-Uzhgorod, Progress.
The construction of trunk gas pipelines on territories of countries of Central and Eastern Europe continues. At present, the largest projects are the above-mentioned Yamal-Western Europe gas pipeline and its actual extension, the Southern Europe transit gas pipeline, will pass via Slovakia, Hungary, Slovenia to Italy. The gas pipeline’s section on the territory of Slovenia is the longest and the most complicated one. To a large extent, it is due to the territorial relief: the plans provide for cutting through the hill and bridge passage. The length of the section on Slovakia’s territory is shorter by almost five times, but additional expenses will be required for crossing Danube and other rivers. The section on Hungary’s territory is the smallest one. The section has its own peculiarities. There are cut-off and branching stations under construction, the intake of gas is planned so as to satisfy its own needs amounting to about 3 billion cubic meters year-on-year.
The maximum volume of gas transit via Slovakia’s territory equals 18.3 billion cubic meters year-on-year, while this indicator for territories of Slovenia and Hungary is much lower (14.8 and 15.3 billion cubic meters year-on-year accordingly).
In the future Slovakia and Czechia will retain their importance as the main transit link with respect to supplies of Russian gas to Western Europe. At the same time, the significance of Hungary, Rumania and Bulgaria will be up due to their role as a transit space for supplying Russian natural gas to the Balkans and Turkey.
Except Albania, no other country in Central and Eastern Europe has enough reserves of oil and natural gas. Even relatively well-provided Romania has to satisfy its needs through import shipments. That is why they are objectively interested in Russian supplies. Most of the region’s states are positive about cooperation with Russia and they are ready together with it to participate in developing and arranging gas fields, in developing gas transport networks. But at the same time they are actively searching for alternative options of gas supplies from the third countries so as to reduce their dependence on Russian gas. The most probable sources of expanding such supplies are the British sector of the North Sea, Norway and Algeria. 

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