ANALYSIS: Russia's double bypass (11/05/00)

ANALYSIS

Russia's double bypass

by Jan Maksymiuk
RFE/RL Newsline

Russia's Gazprom, Germany's Ruhrgas and Wintershall, Italy's SNAM, and Gaz de France signed a memorandum of understanding in Moscow on October 18 to study and develop a new section of the planned Yamal-Europe gas pipeline. The project calls for the Yamal-Europe gas pipeline, currently under construction, to be linked to Slovakia, where it would connect with a network of gas pipelines to Germany, Italy and France. Such a link, while traversing Polish territory, would bypass Ukraine.

It remains to be seen if the project is feasible. In the meantime, all gas experts agree that the main goal of the agreement - regardless of whether it can be implemented - is to intimidate Ukraine into ceasing to siphon off Russian gas transiting Ukrainian territory and into paying for Russian gas more efficiently. According to some Russian estimates, Ukraine's debt for Russian gas stands at $2.5 billion (Kyiv admits to owing some $1.4 billion). Gazprom, however, says Ukraine stole 15 billion cubic meters of transit gas in 1999- 2000 (worth some $900 million).

Gazprom's chief, Rem Viakhirev, commented that the bypass pipeline scheme will make it possible to increase Russian gas supplies to the European Union. But it remains a mystery how this can be done by simply constructing a pipeline to Slovakia through Poland without completing the entire Yamal-Europe pipeline.

Most likely, Ukrainian President Leonid Kuchma was aware of this when on October 19 he shrugged off the deal by saying that "it takes a lot of time [to proceed] from the project to its practical implementation." At the same time, Mr. Kuchma stressed that the capacity of Ukraine's existing gas pipeline network can be increased by 30 percent.

The estimated cost of that part of the Yamal-Europe pipeline that would be built to avoid Ukraine is $1 billion. It is not unfeasible that Gazprom and its Western partners could invest such a sum immediately after the project's feasibility study is completed in favor of the Slovak connection.

For Russia, the implementation of the project would mean obtaining great political leverage in Ukraine. Without Russian gas supplies in payment for transit, Ukraine would become a country as politically and economically dependent on the Kremlin as Belarus.

Warsaw is well aware of all the consequences connected with the bypass pipeline project. That's why a number of Polish top officials hastened to assure Kyiv earlier this year - when the bypass pipeline project became known to the public - that Poland would not support any gas supply scheme that would be to the detriment of Ukraine, Poland's strategic partner.

Many Polish politicians believe that the survival of sovereign and independent Ukraine is a guarantee that Poland itself will not return to the Russian sphere of influence and that the political changes that took place in Eastern and Central Europe a decade ago are irreversible. Given Poland's complicated and tragic fate in the 20th century, one should not dismiss such fears among Poles as trivial or groundless.

Europe wants more Russian gas in order to become more independent from OPEC countries in terms of energy consumption, while Poland wants to be in Europe, that is, in the EU as soon as possible. Moscow has calculated that these two aspirations can be utilized to exert pressure on Ukraine. According to this line of reasoning, Poland will not oppose the bypass pipeline project too strongly if Berlin or Paris - both of which have a powerful voice in Brussels - ask Warsaw to come to its senses and agree.

For this reason, Gazprom signed a deal with its Western partners on building the pipeline even without securing the permission of the country across which the pipeline is supposed to run. Moscow bypassed Poland in its political maneuvering, just as it wants to bypass Ukraine in gas transit.

From an economic point of view, Gazprom's project offers Poland more revenues for Russian gas transit. Some Ukrainian commentators say it is only a matter of time until Poland, pressed by its Western allies, will say "yes" to Gazprom's offer. For the time being, Poland has called for an international conference of all countries interested in the construction of a gas pipeline linking Russia's Yamal peninsula with Western Europe.

Last week, Russian President Vladimir Putin put Vice Prime Minister Viktor Khristenko in charge of negotiations with Poland on building a gas pipeline stretch to bypass Ukraine.

Can Ukraine prevent the bypass pipeline scenario from being implemented? In an attempt to do so, Kyiv has proposed to Moscow that the latter jointly manage Ukraine's gas transport network. Mr. Putin reportedly showed interest in the proposal during his recent meeting with Mr. Kuchma in Sochi. But Mr. Khristenko has noted that "currently our position is that joint management is only possible if 51 percent of a consortium controlling Ukraine's gas transport system is in the hands of Gazprom."

It seems that Kyiv is not yet ready to accept this technical parameter as the starting point for talks with Moscow on Russian gas supplies.

Jan Maksymiuk is the Belarus, Ukraine and Poland specialist on the staff of RFE/RL Newsline.

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