Naftogaz: Russian gas transit via Ukraine cheaper compared to Nord Stream 2

Friday, June 17, 2016 - 16:27 (EEST) Section: Latest news

NJSC Naftogaz of Ukraine estimates that Russian gas transit shipments to the European Union (EU) via Ukraine will be more cost-effective by several times by 2020 than gas transit via the planned Nord Stream 2 pipeline, the company`s press service reported.
”If the capacity is booked at the present level of 110 billion cubic meters (bcm) the delivery via this route will be four times cheaper than via the Nord Stream 2. At 70 bcm of booked capacity, transit costs are expected to be 66.7% lower compared to the Nord Stream 2 option,” the statement reads.
Since 2014, the Russian officials have repeatedly announced their intention to discontinue gas transit across Ukraine starting from 2020, the company notes.
”Gazprom conducts activities aimed at creating a redundant pipeline to circumvent the conventional route. Naftogaz, in its turn, continues to diligently maintain the 110 bcm per year transmission capacity stipulated by the contract with Gazprom,” according to the statement.
This situation forced the Ukrainian regulator to include accelerated amortization into the transmission fees resulting in the increase by more than twofold of transmission costs for Gazprom in 2016-2019, as noted in the report. Starting from 2020, the transit the infrastructure is expected to be fully amortized, the transmission fees will drastically decrease. This will make the transit via Ukraine the most competitive way to deliver Russian gas to the EU, according to Naftogaz.
The company also notes that within the EU there are no sufficient transmission capacities to carry gas to the ultimate consumers through northern Germany where the Nord Stream 2 ends. A number of countries are not physically connected to the German gas transport network within the EU and can only receive gas via Ukraine.
”Considering the ongoing arbitration proceedings in Stockholm, we are concerned with Gazprom`s intentions to spend its scarce resources on economically unjustified projects. Naftogaz supports the establishment of fair, transparent, and competitive environment in the European gas market”, the press service quoted Naftogaz Chief Commercial Officer Yuriy Vitrenko as saying.