"North Stream-2" will not have enough power

"Gazprom" will have to negotiate with Ukraine on the transit and after the launch of the gas pipeline.
Gazprom in 2020 will not be able to do without the Ukrainian gas transmission system for transit to Europe, since by that time the ground infrastructure in the EU will not be ready for Nord Stream 2 gas. By the end of 2019, when the contract for the transit of gas through Ukraine expires, Gazprom will be able to pump through the Nord Stream 2 not more than 34 billion cubic meters of the projected 55 billion cubic meters. Thus, the conclusion of a new transit contract with Ukraine is inevitable.

The Eugal gas pipeline, which is to be the continuation of the Nord Stream 2 gas pipeline through Germany, will be fully built only by the end of 2020, Gascade told Kommersant (owns 50.5% of the project). Meanwhile, the Nord Stream 2 project capacity of 55 billion cubic meters per year, according to repeated statements of Gazprom, is planned to be put into operation before the end of 2019. But by this time only the first of the two Eugal threads will be built. This will make it possible to transport 9.9 billion cubic meters from Lubmin, which will land on the land of Nord Stream 2, to East Germany (the Gaspool zone), as well as another 21 billion cubic meters to the border with the Czech Republic in Doichendorf. In addition, Gazprom will be able to additionally transport approximately 2.7 billion cubic meters of gas to the Netherlands via the existing Nel gas pipeline. Thus, in practice, Gazprom in 2020 will be able to use no more than 34 billion cubic meters of Nord Stream 2. The monopoly will be able to fully load the pipe only with the introduction of the second Eugal thread. Gazprom declined to comment.

In general, the schedule corresponds to the history of the construction of the first Nord Stream.

Then the Opal gas pipeline, which plays the same role as Eugal (gas delivery from the north of Germany to the Czech Republic), was introduced with a one-year interval between the first and second threads - in the fall of 2011 and 2012, respectively. But in this case, the timing of the construction of gas pipelines was tied to the end of the transit contract with Ukraine, which expires on December 31, 2019. The inability to fully load Nord Stream 2 in its first year of operation means that Gazprom does not even have a theoretical chance of avoiding a new transit agreement with Ukraine, which would cover at least 2020.

In 2017, Gazprom pumped through Ukraine 93 billion cubic meters of gas. And even if Gazprom will fully load the available capacities of Nord Stream 2 and manage to build both threads of the Turkish flow (at 15.75 billion cubic meters), the company will still need to pump through Ukraine at least 30 billion cubic meters in 2020 while maintaining the current demand for Russian gas in Europe. However, Gazprom will no sooner have time to build gas pipelines in the Balkans to supply gas to the EU from the second thread of the Turkish Stream - the construction of even a small gas pipeline takes at least a year and a half, and Bulgaria, Serbia and Hungary have not even begun the process of issuing permits. It is likely that by the beginning of 2020 Gazprom will be able to use the Turkish Stream only for Turkey's needs, removing about 16 billion cubic meters of transit from the Ukrainian sector. In this case, Gazprom will need to pump through Ukraine already 43 billion cubic meters in 2020. Otherwise, the company will have to violate long-term contracts with consumers, which can result in fines and losses of billions of dollars.

All these estimates of the volume of necessary Ukrainian transit are made on the basis of the current level of demand for Russian gas in Europe, but this need may grow in the coming years. So, if the Dutch government decides in March to cut production at the largest Groningen field in the EU from the current 21.6 billion cubic meters to 12 billion cubic meters (this is the regulator's recommendation after the earthquakes at the beginning of the year), the country's demand for imports will increase by 10 billion cubic meters per year. And even if Gazprom takes only half of the market niche vacated, there will be no other option for export growth of 5 billion cubic meters, except for the Ukrainian route.

As Simon Pirani of the Oxford Institute for Energy Studies notes, Gazprom can by 2024 ensure the full loading of Nord Stream 2 and two threads of the Turkish Stream, which is likely to allow the company to abandon the Ukrainian route to provide a portfolio of long-term contracts (about 180 billion cubic meters per year). But, in his view, given the growing demand for Russian gas, the company "in practice will not be able to fully close the door for Ukrainian transit", even when these pipelines are built.