The political tensions in Ukraine will most likely disrupt its joint plans with
Croatia and Hungary to link up their pipelines to create a gas corridor that
will connect to the planned Trans Adriatic Pipeline (TAP), an oil and gas sector
analyst at Erste Investment said.
“I am not aware of any concrete fallout
for the project at this stage, but Ukraine’s fate is rather shaky at the moment
so I doubt the joint initiative would go ahead as originally planned,” Tamas
Pletser told SeeNews in an emailed interview.
In October, Croatian deputy
economy minister Alen Leveric told SeeNews in an interview that the startup of
gas flowing along the Adriatic Gas Corridor was seen by 2022.
Leveric
added at the time the prime ministers of Croatia, Hungary and Ukraine should
sign by the end of 2013 a joint declaration as a precondition for the Adriatic
Gas Corridor to become a Project of Common Interest and receive EU funding. That
document is yet to be signed.
TAP will transport natural gas from the
giant Shah Deniz II field in Azerbaijan, connecting with the Trans Anatolian
Pipeline near the Turkish-Greek border at Kipoi, cross Greece and Albania and
the Adriatic Sea, before coming ashore in southern Italy.
Pletser
believes that the current political turmoil will push back by at least several
years the deadline for the completion of this project provided Ukraine survives
intact as a country.
Even if Ukraine drops out, the gas corridor concept
will still make sense, in his view, since connecting Hungary with the liquefied
natural gas (LNG) terminal planned by Croatia on the Adriatic island of Krk
would improve the security of supply for both countries.
Under the
downsized format, the transport capacity should be significantly lower, Pletser
said, adding that instead of 10-20 billion cubic meters (cu m) per year, 3.0-6.0
billion cu m would suffice. This would also significantly lower implementation
costs. Both markets – Croatia and Hungary – have experienced a very sharp fall
in gas consumption, probably the largest in Europe, the official
added.
SEE GAS PRICES SEEN DROPPING BY 5.0-10%
Pletser expects gas
prices in Southeast Europe (SEE) to fall by some 5.0-10% as Russia's Gazprom is
under pressure to offer rebates to protect its market volumes.
Bulgaria,
Moldova and FYROM are probably in the worst position in the SEE region – they
have the least options for supply diversification, so they are likely the pay
the highest price for Russian gas in the future, the expert said.
At the
same time, Turkey has ample supply options – it has two LNG terminals as well as
Blue Stream, the trans-Black Sea gas pipeline that carries natural gas from
Russia into Turkey and has some surplus capacity at the moment. The country also
receives natural gas through Bulgaria and Iran.
UKRAINE TENSIONS MAY
SHARPEN FOCUS ON LNG TERMINALS
Asked if the current tensions between
Ukraine and Russia may act as a catalyst for gas supply diversification projects
in the region, Pletser said this was possible as the international community no
longer sees Russia as a 100% reliable partner, but rather as one that wants to
use energy as leverage to influence some countries’ domestic
politics.
“The most likely impact will be on the liquefied natural gas
[LNG] market – more receiving terminals are likely to be built in Europe
allowing more LNG to be shipped here.”
He sees the same thing happening
with cross-border gas link projects in the Central and Eastern Europe (CEE)
region.
“CEE will operate as a single, integrated gas market 5-10 years
from now, similar to Western Europe.”