Valery Bessel: "US will not be able to replace Russian gas in Europe"
The sanctions against Russian pipeline projects and companies participating in them, signed into law by US President Donald Trump a week ago, having no immediate impact on Russian-European cooperation, attack it in the sphere of information, causing fears among experts and company leaders and making them guess against whom Washington could apply these sanctions. The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, told Vestnik Kavkaza about true and false threats to Russian export gas pipelines posed by the new sanctions.
- In your estimation, what level of threat do the sanctions signed a week ago pose to the stability of Russian gas supplies to Europe?
- I think there is no threat here. On average, Russia supplies 180 billion cubic meters of gas to Europe per year, and the United States is not able to replace these volumes, since there is a gas deficit of 30 billion cubic meters of gas a year in the US. This sanction law was adopted prospectively, at least for a period of 15-20 years. I think that the Turkish Stream project will be 100% implemented by Gazprom, while the Nord Stream 2 pipeline may be amended during the construction period, as it is funded by European companies.
At the same time, Europe will under no circumstances limit its gas consumption, which supplies primarily affect the industry (energy and industrial production are the main gas consumers, not utilities). No wonder Europe allowed Gazprom to operate the OPAL gas pipeline: such a representation of the pipeline is more profitable for them than the risks of gas imports through Ukraine, whose gas transmission system has been in operation since 1984 and its current technical condition is unknown.
There will be no adjustments, no instability in the European gas market now, it is just an information influence. Undoubtedly, Poland is the leader in attempts to accept US liquefied gas, but according to our estimates, in order to replace the supply of Russian gas, the US needs to purchase or build 65 gas tankers capable of transporting 250,000 cubic meters of gas (200,000 tons of LNG). Such ships already exists, but they are occupied by Qatari and Australian LNG suppliers, there are no ships left, and an appropriate quantity of them can be built only in 15-20 years, using all the shipyards of the world. So these sanctions are just part of the game of politics.
- In theory, if Gazprom loses Western financing of pipeline projects due to these sanctions, will it be able to realize them alone?
- Theoretically, it would be very difficult for us, but I think that Russia will build pipelines in partnership with someone. Moreover, as you know, everything which does not kill us makes us stronger: we already were under sanctions and were able to develop, and in the USSR sanctions were even tougher. Of course, one must make very serious decisions and think about where to get money and how to attract investments. Attracting civil investments to export projects would be a good option. Let me remind you that in 2012 there were 12 trillion rubles on ruble deposits of Russian citizens, now there are 18.5 trillion rubles - all this money is in banks, since there is no interesting investment project to offer people. The Nord Stream-2 requires 10 billion dollars, about 600 billion rubles could be invested in it by Russians, but we are not able to create a normal investment climate in the country, so we have to say that we wouldn't have enough money to complete the pipeline independently.
- Can Russia temporarily freeze these projects under the worst-case scenario, and how will it affect our gas supplies to Europe?
- So far, there would be no impact. The capacities by which we pump gas - the Belarusian corridor, the Ukrainian corridor, the Blue Stream and the Nord Stream - are enough to supply Europe with gas. In addition, the Yamal-LNG project with 20% participation of Total, which will be able to produce 16 million tons of LNG per year (20 billion cubic meters of gas), is being completed, and a quarter of this volume will go to Europe. Tough political decisions in the framework of the new sanctions can be taken within the next 3-5 years, all this time the supply of Russian gas to Europe will be stable. We should not forget that there are a lot of elderly senators in the US Congress, like John McCain, so its composition will change in 5 years, but it is not yet known what will happen next. All this time, Russia will seek investors which will circumvent the sanctions. It is not fast, there should not be panic in the market, and even if it was, we would have already noticed it due to the ruble and the euro rate hikes.
- Does it mean that the new sanctions will not lead to an increase in gas prices in the short term?
- There will be no increase in gas prices, as excess capacity is sent to Europe now. The pumping of our gas through Ukrainian gas pipelines is not a problem for Russia, but it's a problem for Europe, as if it wants to get more gas, it will need to negotiate with Ukraine, which has been capable of pumping 60-80 billion cubic meters of gas per year from Soviet times. In the current conditions, when Europe starts to compete with China very seriously, which develops the most powerful production cluster near Minsk, and the US economy shows miraculous growth, Europeans need cheap gas. Russia offers this gas, and there is no gas deficit in the European market and is not expected.
In fact, the new sanctions rather hit Iran, cutting it off from Europe. Iran has never before before sold gas to Europe, it does not have a necessary pipeline system to do it, and now the US can stop any such project.