Quote:
Stable supply of energy to Europe in the next few decades will depend on relations with Russia.
This is the principal message from British Energy Minister Malcolm Wicks who visited Moscow recently. It is no coincidence that such a blunt statement follows the Russian-German agreement to build the North European gas pipeline (NEGP).
Signed by Vladimir Putin and Gerhard Schroeder on September 8 in Berlin, the agreement between Gazprom and Germany's BASF and E.ON was perhaps the key geopolitical event of the past few months. At any rate, it has provoked a strong response throughout Europe. The new line will pass under the Baltic Sea and ship Russian gas direct to Germany, bypassing Eastern Europe, relations with which leave much to be desired. There will also be feeder lines to Sweden, Finland and the Kaliningrad region. It is a real breakthrough for Russia both in energy and political terms.
The agreement is clearly beneficial for Russia. In expert opinion, the first year of operation will bring it $4 billion in earnings, in addition to cuts in transit fees which in Ukraine alone amount to 20% (13% is payment for transit and 7% expenses to maintain pipeline pressure). Minus transit costs and pumping losses in Belarus and Poland.
More importantly, several other countries can join the pipeline, first of all Britain, the Netherlands and Denmark. Branches are contemplated to Scandinavia. The project is feasible and offers Russia not only financial, but also geo-economic advantages in increasing its energy presence in Europe. As the British minister said, the EU must have international deliveries in order to have a functioning domestic energy market, which, he said, can be achieved through cooperation with such strategic energy partners as Russia. Britain has common interests with Russia, which supplies 50% of Europe's gas, said Wicks.
The agreement is also to Germany's advantage. Apart from political dividends for Schroeder and his team, German companies will for the first time gain access to Russian gas fields supplying the line. Also, Germany will transit an additional 55 billion cubic meters of Russian gas to Western Europe.
The scheme likewise has its list of "casualties" - Russia's east European and Baltic neighbors. The potential threat of losing transit fees and getting reduced gas deliveries has soured relations between Germany and Poland. Officials in Latvia and Lithuania have criticized not only the NEGP agreement, but also Germany's stand, as well as Brussels' disregard for the interests of "minor" European nations.
The European Commission, which only recently rejected the plans of Polish Prime Minister Marek Belka for an Amber gas pipeline across Poland, Ukraine, Latvia and Lithuania, approved the Russian-German agreement almost overnight. "We welcome any infrastructure helping to supply gas to EU countries," Rupert Krietemeyer, a spokesman for the European Commission, told a news conference in Brussels.
Hence stinging political labels: Polish President Alexander Kwasniewski described the NEGP agreement as the Schroeder-Putin Pact, which evoked predictable associations in the Baltics, where the agreement is seen as a gas version of the Molotov-Ribbentrop Pact. "With German support, Russia can rule over large territories and split them as it sees fit. Knowing what is on the minds of Russian policy planners, no one can doubt that the so-called economic union between Russia and Germany will be a political alliance," said Vytautas Landsbergis, a member of European parliament, and ex-chairman of Lithuania's parliament.
Indeed, as the British Guardian wrote on September 8, the Russian-German project can alter the geo-political situation in Europe, a process we are witnessing already. The failure of the East European appeals to Brussels is due partly to the political instability in some of these countries, as demonstrated by recent events in Ukraine. With world energy markets becoming increasingly unpredictable, such a reliable partner as Russia is preferable.
