Gazprom is reportedlyconsidering opening an office in Crimea.But the Russian gas monopoly told New Europe on 17 March “that it can offer no comment on this issue”.
Meanwhile, AlexeiKokin, a senior oil and gas analyst at UralSib Financial Corp, toldNew Europethatwhile “it’s not particularly difficult to open an office and move some employees over to Crimea,” the question is whether it makes sense and that depends who will own and operate Crimea’s local gas system. The next question is whether it will remain part of the Ukrainian system or whether Gazprom has ambitious plans to connect it to its south system from Krasnodar.
“Since it [Gazprom] is busy building its South Stream system it could extend the pipeline from Krasnodar to the Crimea,” Kokin said. “That’s one thing that they could do that is realistic and it’s probably not outrageously expensive - at least in theory,” he added.
Crimea’s Parliament Vladimir Konstantinov told Russia’s RIA news agency on 13 March that Russian companies such as Gazprom should be involved in Crimea’s oil and gas production. He added that the Ukrainian region, which on 16 March voted in a controversialreferendum to join Russia, was guarding oilfields and rigs.
Crimea has already announced that it may nationalise oil and gas assets within its borders belonging to Ukraine. Crimea could take control of Chornomorneftegaz, a Ukrainian state-owned enterprise, and then “privatise” it by selling it to Gazprom. “The first step has been taken and then the Crimea could just auction off both the production company and the transportation system,” Kokin told New Europe. “In theory it’s possible that Gazprom acquires them and then connects the gas system to its own system,” he added.
But the expert warned that the Russian gas giant may be opening itself up for an international lawsuit. “The question is whether Gazprom really wants to do that since Ukraine might sue Gazprom internationally and it’s possible that Gazprom’s assets in Europe might be seized or frozen under such a lawsuit. My guess is that Gazprom will be very careful not to expose itself to a major lawsuit potentially filed by Ukraine,” the Uralsib expert said.
At this stage, Gazprom sells gas to Naftogaz – the Ukrainian company - and then Naftogaz resells to the Ukrainian consumers. Gazprom could sell gas directly to Crimea, Kokin said. In that case Crimea will be the end user – similar to Gazprom’s customers in Europe. “Crimea will pay the price to Gazprom and Gazprom will pay the transit fee to Ukraine. In theory that’s possible. In reality Crimea is going to get a subsidized rate for gas and the big question is who will pay for that,” Kokin said.
Gazprom could also potentially explore for oil and gas offshore Crimea. “But there is a potential for dispute between Ukraine and Crimea about who owns which segment of the coast of the offshore zone,” Kokin said, adding that Gazprom has some spare capacity in Yamal and it’s not that much interested in medium-sized projects such as Crimea. “Gazprom will probably stay away from that. But one possible solution is a kind of independent company set up for that purpose – a sort of vehicle for Crimea. It might be capitalised by Russian banks, for instance, and some Russian sources and it might be operated by Gazprom managers or Rosneft managers. But my guess is that it won’t be part of Gazprom. Because Gazprom would be then exposed to international legal risks,” Kokin said.