Posted 15 августа 2023,, 14:34

Published 15 августа 2023,, 14:34

Modified 16 августа 2023,, 07:54

Updated 16 августа 2023,, 07:54

«Gas Union» as a castle in the air: Gazprom cannot find a replacement for the EU in the East

«Gas Union» as a castle in the air: Gazprom cannot find a replacement for the EU in the East

15 августа 2023, 14:34
Gazprom's widely advertised project to supply gas to the East is not understood either by the partners «appointed» by the Russian gas monopolist, nor by the one for whom all these plans are being forged — China. Meanwhile, Europe's gas storage facilities are already full for the winter heating season.

Elena Petrova, Natalia Seibil

Following the oilmen, Gazprom starts a company to turn to East. But unlike Rosneft and its comrades, who managed to jump off the pipe onto tankers, it is not easy for the gas giant to perform such a trick. After a year and a half of sanctions and a year after the undermining of the Nord Stream, which put an end to gas cooperation with Europe, Gazprom gave birth to the Gas Union. Negotiations with Uzbekistan, Kazakhstan and Turkmenistan have just begun, but it is already clear that the neighbors are not waiting for Russia if it harms their own interests.

Gazprom and Kazakhstan

Kazakhstan has heard about the triple «Gas Union», but no action is planned. The representative of the Ministry of Energy of Kazakhstan Ilyasov heard about the new Russian initiative, but his awareness ends there:

«Today, work is underway on the technical preparation of the Kazakhstan section of the Central Asia — Center main gas pipeline for the transportation of Russian gas through Kazakhstan to Uzbekistan. The work is scheduled to be completed on October 1, 2023,» says the speaker of the Ministry of Energy.

And no hint of big joint plans.

Gazprom and Uzbekistan

The situation with Uzbekistan is clear, because the country has to supply gas to China, but since it does not have its own gas, the fuel it receives from neighbors and resells is not enough to fulfill the contract. Marcel Salikhov, Director of the HSE Center for Economic Expertise, says:

— Uzbekistan does not have gas, but it has existing contracts for the supply of gas to China, which it does not fulfill. Therefore, it makes sense to agree with Uzbekistan that Russia supplies additional gas to Uzbekistan, and Uzbekistan increases exports to China. And the resulting profit is divided in some proportion.

Another situation is with another «partner» of Russia in the «Gas Union» — Turkmenistan.

Gazprom and Turkmenistan

Turkmenistan, unlike Uzbekistan, has its own gas. As there is also a pipe to China with a capacity of 55 billion cubic meters a year, through which the republic pumps gas to The Celestial Empire. Turkmen gas accounts for 40 billion, the rest is supplied by Uzbeks and Kazakhs. The very idea of Gazprom seems to experts to be poorly thought out:

— Initially, this concept is to send gas from Russia to Turkmenistan is strange. Turkmenistan has a lot of gas. Even if there are problems, as it was in winter, these are temporary stories. In the long term, Turkmenistan has gas.

Actually, that is why Turkmenistan's rejection of the Russian proposal sounds very definite, which is what the Turkmen Foreign Ministry said:

«The existing scheme of distribution of volumes of gas supplied to China does not include plans to expand the membership of the Turkmenistan —China gas pipeline project.»

Thus Gazprom is in a difficult position. You can talk for a long time about how Europe is «freezing» and bending. But today we received a message that Germany's gas storage facilities are already 90% full. The conclusion is simple — and this winter the Germans and other Europeans will not freeze and will not run back shouting: «Come back, I will forgive everything!».

Gazprom itself had the most difficult year since Soviet times. So little — 100 billion. cubic meters — the gas giant has not yet sold in recent history, neither in the damn 90s, nor later. But they were flowers. This year the forecast is even worse — everyone will be happy if Gazprom sells half of last year's volume.

Gazprom's hope — China — bought 35 billion cubic meters of gas from Turkmenistan in 2022 and paid $ 10.3 billion. Russia's success in pipeline gas sales in The Celestial Empire is much more modest. According to the «Power of Siberia», 16 billion cubic meters were delivered. Gazprom earned $4 billion on this.

— «The Power of Siberia -2», a new large project through Mongolia, it is worth it because there is no long-term contract for the supply of gas to China. China is not showing any rush demand because they have alternatives. Now there is no urgent need for gas in the conditions of economic slowdown, — says Marcel Salikhov.

It comes to what Gazprom did not do at the best of times, due to the fact that the volumes are scanty. Dmitry Alexandrov, Head of the Analytical Research Department of IVA Partners, says:

— «Gas Union» assumes gas supplies from the Russian Federation to Kazakhstan and Uzbekistan using the capacities of existing pipelines, for example, the branches of the CAC, to meet the domestic needs of these countries, taking into account the growth of consumption, their exports to China and balancing peak demand.

But Turkmenistan and its partners do not really need this either. The Gas Union remains the air lock of the Russian gas monopolist.

Marcel Salikhov gives a direct answer to a direct question

— How much has Gazprom lost on the European market?

— About 100 billion cubic meters, no gas unions will be able to make up for it. Even purely arithmetically there are no such volumes.

One thing remains — to offer a platform and wait, your services will be needed. If Turkmenistan or Kazakhstan suddenly have difficulties for some reason, you can immediately offer Russian gas. Gazprom has never been in such a position before. Apparently, you'll have to get used to it.