Gazprom will need Ukrainian transit also after 2019

The extension of the Nord Stream 2 pipeline into Germany, Eugal, will be completed around the end of 2020, Kommersant Daily writes today quoting sources from the operator of the project Gascade. This implies that Gazprom will be able to transit up to 34bcm of gas through Nord Stream 2 in 2020, compared to the 55bcm full capacity, and dependence on transit through Ukraine will remain in place. In this scenario Gazprom will need to deliver about 43bcm of gas through Ukraine in 2020 compared to 93bcm in 2017. Note that this implies that both Nord Stream 2 and Turkish Stream pipeline are constructed on time. Most probably by 2020 Gazprom will not be able to use Turkish Stream for exports to EU countries as work is yet to begin on the possible extension of the pipeline on the Balkans. Yesterday, it emerged also that Gazprom has given up for now the plans to build two more legs of Turkish Stream.

These estimates are based on existing EU demand for Russian gas, meaning that they are rather conservative. Another detail is that even if Gazprom had the required annual capacity to circumvent Ukraine, it may still need its gas transit network for peak winter periods. Overall, the calculations confirm that Gazprom will need to find some agreement with Naftogaz on gas deliveries also beyond 2019.

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