Processing Magazine

Russia brings back Yamal - Europe-2 pipeline project

April 9, 2013
Gazprom headquarters in Moscow
Gazprom headquarters in Moscow.

A plan for the construction of a second strand of the Yamal - Europe-2 pipeline project for the section from the Belarusian border via Poland to Slovakia has been proposed by Russian gas giant Gazprom.

Gazprom and the Polish Minister of Economy met in Saint Petersburg to discuss the project. Gazprom's CEO Alexey Miller presented the key parameters for the pipeline project to Janusz Piechocinski, who is also Poland's deputy prime minister. Miller explained that Yamal - Europe-2 would be beneficial to Poland because of the gas transit fees it could charge, while the project would also provide consumers in Central Europe with more energy security, Gazprom said in a statement.

RELATED: Russia signs breakthrough energy deal with China

Gazprom added that Miller had signed a memorandum of understanding with the CEO of Polish pipeline operator Europol Gaz, Miroslaw Dobrut. Gazprom explained that a feasibility study would be conducted within the next six months.

The new pipeline would reduce the amounts of gas flowing through the Ukraine, in a bid to resolve the serious pricing issues that Russia has with Kiev. Currently, the Ukraine has to pay $430 per 1,000 cubic meters of gas, a price which the country finds unaffordable. Miller told Russian President Vladimir Putin that the new link could be launched in 2018 or 2019, increasing the capacity of the pipeline by 30 percent, or approximately 15 billion cubic meters a year, bringing the pipeline's total capacity to 33 billion cubic meters a year.

However, shortly after the announcement was made, Polish officials reacted to the news with surprise, claiming that the country had no plans to increase its energy dependency on Russia. Warsaw did not deny that a document had been signed, but said that it was not a legally binding agreement and did not include a decision or a pledge to complete the project. Polish officials even went further and accused Russia of using gas as a tool for political games. The country's Prime Minister Donald Tusk stated that Poland did not "want to expand the pool of Russian gas" and added that the country would keep the issue of gas out of politics, the Financial Times reported.

Gazprom has been hit by a decline in demand for gas in Europe and, consequently, its exports to what was its biggest market diminished. As a result, President Putin called for a revival of the Yamal - Europe-2 pipeline project, which was long considered forgotten. Although Russia seems determined to complete the pipeline, industry analysts commented that it was still too early to say if the project would be implemented. In fact, some experts believe that, with the announcement, Russia hoped to persuade the Ukraine to reconsider its position regarding gas supply prices. Kiev tried to arrange gas imports from other European countries that pay less, but Moscow slammed these attempts as being "fraudulent, " the Financial Times pointed out.