Ukraine fears how the future will look like if Nord Stream 2 is completed. Russia might stop with gas transit through Ukraine, which is predicted to be costly for consumers, but Germany and the U.S. seems to be ready with a plan.
Nord Stream 2 is almost complete, making many in Ukraine worried about its consequences for Russian gas transit through Ukraine. A large part of Russia’s gas transits to Europe goes through Ukraine, but that picture could change after the completion of Nord Stream 2 and result in lost revenue for the Ukrainian state budget. Russian President Vladimir Putin has already stated that Ukraine would need to demonstrate good will in the future if it wants Russian gas transits to go through Ukraine.
At the same time, Ukraine’s east-west gas pipeline system is currently only operating at around 20 percent of its capacity to about 30 bcm for domestic consumption and 40 bcm for transit, according to UBN. Russian gas transit through Ukraine was 70.4 bcm in 2017, 65.4 bcm in 2018, and 66.3 bcm in 2019 before it dropped in 2020 to 39.5 bcm.
Russia and Ukraine signed a new gas transit deal back in 2019, ending in 2024, and the Russian gas transit through Ukraine has dropped since. The Ukrainian fear is that it will be the last contract as Nord Stream 2 will be completed by then and that Russia then will cut off Ukraine. It will mean higher prices for Ukrainian consumers and lost revenue.
“However, if the Nord Stream-2 gas pipeline does work, we will have no more than 18 billion cubic meters left in the pipeline, according to all estimates (against 55.8 billion cubic meters in 2020 – ed.) … Even the Italian direction will not work in full,” said Lana Zerkal, the adviser to the Minister of Energy of Ukraine, previously to Ukraine24.
Ukrainian politicians are asking for help
Ukrainian politicians have expressed concern about the EU’s, and especially Germany’s, continued cooperation with Russia over the completion of Nord Stream 2. The project will provide Germany will a much-needed energy supply. Still, critics say that it will also make the EU too dependent on Russia and give Russia leverage over the EU.
“The completion of the Nord Stream 2 gas pipeline is a serious threat to peace and security in Europe. War in Ukraine and Eastern Europe will draw in all the Euro-Atlantic countries. Russia’s continued intimidation, deceit, and disregard for international law demonstrate that its leadership cannot be trusted and must be contained. We call upon the international community to unite and block Nord Stream 2,” wrote Paul Grod, the president of the Ukrainian World Congress, previously in Kyiv Post.
Those concerns have also been shared by the U.S., which previously sanctioned the project in an attempt to stop its completion. However, recently, U.S president Joe Biden has decided to waive several key sanctions against Nord Stream 2, and the work on Nord Stream 2 is, therefore, continuing, and is expected to be completed this year.
Germany might want to help Ukraine
For the U.S, it is vital that Russia cannot use Nord Stream 2 and the lack of transit through Ukraine as leverage against the country. The Ukrainian news agency Unian wrote that Germany and the U.S. are trying to find an alternative to help Ukraine.
“We understand that Germany is ready to provide guarantees, and we believe in these guarantees. But Russia will be a party to these guarantees, and here we have doubts, so we need a lot of substantive and detailed negotiations,” Foreign Minister Dmytro Kuleba said.
According to the German newspaper Handelsblatt, it is possible that Germany would create a hydrogen production industry in Ukraine to help compensate for the economic losses as a result of Nord Stream 2 and the expected fall in Russian gas transit.
“There have long been plans to turn Ukraine into a hydrogen exporter. Hydrogen is urgently needed as an energy carrier in Europe if the continent wants to achieve its climate goals. The idea is to convert the existing network of natural gas pipelines for this purpose,” writes Handelsblatt, “However, high investments in renewable energies, especially in wind power, are required so that Ukrainian hydrogen can be produced in a climate-friendly manner. For this, Kyiv needs help.”
