Russian gas supply to Europe must remain at the present level

2 june 2014

“We expect that in the future, Crimean gas supply infrastructure will be expanded”, - said the Head of Department for Strategic Studies in Energy at the Analytical Center Alexander Kurdin at a roundtable on “Russian gas policy: Crimean gas infrastructure and gas supply to Europe” which took place at the International Multimedia Press Center "Russia Today". Large-scale works on providing settlements with natural gas are scheduled to begin on 1 June, 2014 in Crimea.

The present level of domestic consumption of gas in Crimea is approximately at the same level as the production – 1,7. “Previous Crimean authorities have worked on this issue, connecting about 70% of the settlements to the natural gas pipeline infrastructure, which is a big achievement”, - mentioned the expert. According to him, ensuring a complete gas supply for the entire region is possible but one must keep in mind that “a gas supply infrastructure for the entire Crimea is not an easy to complete task”. “There are certain gas supply programs presently run by “Gazprom” and investment programs implemented by natural monopolies and thus the situation can’t be changed in an instance”, - underlined the expert.

Mr. Kurdin spoke about Crimean energy supply program preliminary version of which was developed and adopted by the Ministry of Energy of the Russian Federation. He mentioned that construction of 700-800 MW thermal power stations is planned in the region. These stations will be gas powered and will require the necessary resource supply. As a result, the needs of Crimea may increase by 1-1.5 billion cubic meters per year resulting in a total amount of 3 billion cubic meters or more. “It was planned to increase Crimean domestic production to 3 billion by 2015 anyway, - he concluded. – But it is dangerous to rely on the idea that the domestic production of the region is capable to cover its needs”. Besides, the conflict over the ownership of the field in the Black Sea may escalate. Therefore, according to the expert, the construction of a pipeline from Krasnodar with a capacity of 2 billion cubic meters per year by the beginning of 2016, is reasonable and promising.

Commenting on European need in Russian gas, Mr. Kurdin pointed out that European gas industry is not taking into account the possibility to apply sanctions because it will certainly attract excessive political influence. “They are aware that Europe depends heavily on Russian gas and there are no other alternatives”, - mentioned the expert, adding that last year “Gazprom” supplied 160 billion cubic meters of gas, which is a considerable amount and not easy to compensate even partially. “We are expecting that European Union and international organizations it cooperates with, will succeed in influencing Ukraine to solve this issue”, added Mr. Kurdin. According to him, there is a problem regarding politicization of the situation. It is possible that Ukraine will refuse to compromise until the very end, thinking that aggravation of the situation and the escalation of tensions will force Russia and European Union to make concessions. The expert considers that future collaboration between Russia and Ukraine requires the rejection of price politicization. A long-term compromise must be reached based on economic formation of prices and not on short-term political concessions.

Regarding European need for gas, Mr. Kurdin referred to the Global and Russian Energy Outlook, which was elaborated by the Analytical Center together with the Institute of Oil and Gas Problems of the Russian Academy of Science. According to the estimations presented in it, Europe imports of Russian gas may slightly increase in the long-term. Nevertheless, giving the recent EU initiatives in reducing its dependence on Russian gas, experts are not expecting a significant increase in Russian export of gas to Europe. “Despite the objective economic needs of Europe in Russian gas, we must admit the following fact: if the European bureaucracy has a certain purpose, despite the encountered problems, it will gradually and smoothly start moving toward its realization, - pointed out Mr. Kurdin. – That’s why we should not get our hopes up expecting a significant increase in export of Russian gas but there won’t be a decrease either”.