"Necessary element": a member of the scientific council of the Russian Academy of Sciences - about Washington's plans for Ukrainian gas storage

— Andriy Aleksandrovich, in your previous interviews you said that the United States is interested in controlling underground gas storages (UGS) located on the territory of Western Ukraine in order to cut Russia off from the European gas market.

This plan, according to you, is being implemented by the American side with the help of Poland and other countries of the region, which are part of the Trimorya region, an old geopolitical project of Warsaw.

Please tell us more about the goals of these plans.

— In 2016, the US began exporting liquefied natural gas (LNG).

And in the same year, 12 Eastern European countries, together with the United States, signed, in fact, over the head of Brussels, the Three Seas Initiative (Trimorye) agreement.

"Trimorye" serves to promote, first of all, American and Polish interests, which were subsequently joined by Bulgarian ones.

The goal of the United States is to promote its LNG, which is more expensive for consumers, to Europe, replacing it, as far as possible, with cheaper Russian pipeline gas.

Poland's goal is to become a distribution center for regasified American LNG from the north in Central and Eastern Europe.

Bulgaria's goal is to become the same distribution center for US LNG coming to Eastern Europe from the south.

The goal of the United States under this plan is to cut off Europe from Russian gas resources and supplies.

The American side expects to do this by cutting off and thereby intercepting in the area of ​​Western Ukrainian UGSFs the gas transportation infrastructure going further to Europe, which was once built for Russian supplies, and subsequently filling these pipelines and Western Ukrainian UGSFs with regasified American LNG.

LNG supplies are carried out to Eastern Europe through terminals on the southern (in Croatia, Greece) and northern (in Poland, Lithuania) coasts.

The goal of the United States is to connect these terminals with a gas transmission network into a vertical corridor that will stretch from north to south and provide access to both Western Ukrainian UGS facilities and the Central European Gas Hub (CEGH) in Baumgarten, on the border of Austria and Slovakia.

This is the main gas trading platform in Central and Eastern Europe, through which Russian gas flows through the Ukrainian transit corridor further to Southern and North-Western Europe.

To do this, it is necessary to expand the existing, and where necessary, to create a new north-south gas transmission infrastructure in Eastern Europe, which provides the possibility of a physical reverse of gas supplies.

Ukrainian UGS facilities have a special role to play if this American plan is implemented.

If they are not filled with Russian gas after the completion of the transit contract with Ukraine in 2024, then the United States expects to use them as backup, buffer gas storage facilities before it is sent to the European market. 

— Tell us, please, what are the Ukrainian UGSFs?

Do they need modernization?

— The largest complex of natural gas storages is located in the west of Ukraine.

Their volume (25 billion cubic meters) is approximately three quarters of the total volume of all Ukrainian UGS facilities (32 billion cubic meters).

Ukraine was the first of the republics of the USSR to produce gas.

Most of the modern UGS facilities in Ukraine are depleted gas fields, which are now used as storage facilities.

UGS is a rather complex engineering structure that needs to be maintained in proper condition.

They serve to regulate seasonal fluctuations in demand, which falls in summer and rises in winter.

Therefore, it is necessary that UGS facilities be located near the gas pipeline so that in summer, when there is no heating load and demand drops, they can take part of the supplied gas for storage.

And with the onset of winter, when demand grows, the necessary volumes can be obtained from underground storage facilities for ongoing contract deliveries.

It is for this reason that the demand for UGSF began to grow along with the growth in the volumes of Soviet and Russian natural gas exports.

In western Ukraine, underground storage facilities have been built since the late 1970s, the latter were built already in the 1990s, so these are relatively modern facilities.

Ukrainian UGSFs are fully operational, although they need maintenance costs, like any facilities of this kind.

• Bilche-Volitsko-Uhersky underground gas storage (UGS), Ukraine

• AP

- It turns out that the United States wants, relatively speaking, to take over this infrastructure in the interests of its LNG producers?

In one of your previous interviews, you noted that within the Trimorie, a north-south corridor is being built from LNG terminals in the Baltic in Poland (Swinoujscie) and Lithuania (Klaipeda) with the creation of pipeline jumpers that could work directly and reverse, reverse mode.

How is the creation of these corridors going in practice?

— After the American shale “revolution”, which took off at the end of the first decade of this century, there was an overabundance of gas in the American market, so producers are looking for export channels for its sale.

The main gas markets for the United States are overseas, which means that gas must be supplied in the form of LNG.

And the European gas market is best suited for this role, since it is more convenient and cheaper (because it is shorter) to transport LNG to Europe than to Asia.

Most US LNG plants are located on the Gulf Coast.

To deliver LNG to Europe, LNG carriers do not need to pass bottlenecks, such as the Panama Canal, which is on a short journey to Asia.

This provides great advantages, since the passage of any channel means additional costs, both time and financial.

However, LNG deliveries to Europe are profitable for US producers only on the condition that high prices are maintained in the European gas market.

And this is hindered by the supply of cheap Russian gas.

They now account for about a third of the European natural gas market.

The export of American LNG to Europe is constantly on the verge of profitability, so it goes mainly to Asia.

The rise in prices in Europe made it profitable to supply American LNG to this market.

Therefore, now the United States has turned on the mechanism of more active attempts to cut off Russian supplies from Europe. 

But in order to force us out of the European market, it is not enough for the United States to simply increase LNG supplies - it also needs a network infrastructure.

It is for her that the main struggle has now unfolded.

It is too expensive to build a new gas pipeline network from scratch from LNG receiving terminals on the coast deep into the EU, since the main supplies come from the east.

Therefore, the goal of the United States is to get the networks that already exist.

The Americans need to enter the European market from the east, cutting into the Russian supply chain from the north and south.

In this way, they want to solve two problems: cut off Russia from the European market and not invest in the construction of new pipeline capacities, but saddle up and use the existing pipeline system.

• LPG tanker, USA

• © Robert Nickelsberg/Getty Images

- So the key goal of the United States in this case is to create an artificial deficit in the European energy market, ousting Russia from its traditional niche, and occupy the infrastructure built for Russian gas?

— Quite right.

And in order to connect to this infrastructure, the United States needs to build transport corridors from the south and north to Central and Eastern Europe.

This means the construction of new terminals for the acceptance and regasification of LNG on the coast: in Poland, the Baltic States, Greece, Croatia, etc., some of which have already been created and are still operating in the domestic markets of these countries.

As well as the construction of sections of gas pipelines where necessary - a kind of jumpers.

For example, on May 1, the Poland-Lithuania interconnector was put into operation.

That is why Poland and Bulgaria are the first to now refuse to purchase Russian gas under the new settlement procedure.

These countries want to become entry gates for American LNG and centers for its further distribution to the countries of the region.

The pan-European energy policy also serves these purposes.

Over the past years, the European Commission has been adopting norms aimed at creating an extensive gas infrastructure in the EU, capable of ensuring free flow of gas in all directions.

This was a key task for all previous EC compositions.

But in 2019, when the new European Commission came to power with its Green New Deal, the European Investment Bank (EIB) imposed a ban on financing any oil and gas projects, including oil and gas infrastructure.

It turns out that building a new infrastructure in Europe to suit your (or the US) needs is now even more difficult than before.

And more expensive.

As for Ukrainian UGS facilities, in 2017 they were transferred to the mode of operation of a customs warehouse.

This means that gas can be pumped into these UGSFs, kept there duty-free for 1,095 days, paying only for storage, and then taken back without regard to seasonal fluctuations in demand and transit supplies in only one direction, as was the case before.

Until 2017, the use of these storage facilities was limited only to smooth out seasonal fluctuations in supplies and in transit storage mode.

Now, Ukrainian UGS facilities can be used to influence the situation at the Austrian gas hub Baumgarten, which is located very close by.

• LNG terminal Swinoujscie

• © Wikimedia

- You mentioned the Trimorie initiative, which is promoted primarily by Poland, claiming the status of a regional leader.

Then why are the Poles ready to give Ukraine the role of a key energy hub in Europe?

Or does the opinion of the Polish side play no role here?

- There is no talk of Poland transferring this role to Ukraine.

The Polish side itself is economically interested in the implementation of American plans.

And Warsaw's political statements regarding the Three Seas Initiative are simply designed to support this purely practical interest.

It is no coincidence that Piłsudski's "Intermarium" was revived as "Trimorye" precisely when the United States entered the world market with LNG supplies, having obvious preferences, all other things being equal, to supply it to Europe.

By and large, what we are talking about is a joint project between Washington and the countries of Eastern Europe.

Western and Central Europe, the implementation of these plans promises energy shortages and higher prices, respectively, economic difficulties.

But the countries of Eastern Europe, which intend to distribute gas flows, will benefit.

And Ukraine is a necessary element of this scheme.

That is why the Polish authorities have been so actively supporting Kyiv over the past years, including the recent fraternization of Duda with Zelensky and the opening of Ukraine to the increase of the Polish presence in the country.

- Then why did Washington, Warsaw and Kyiv talk for years about the importance of maintaining the transit of Russian gas through Ukraine, if they have plans to eliminate this transit and replace it with the transit of American gas from the northern and southern coasts of Europe?

- Because this transit meant that it was not the USA, not the EU, but the Russian Federation itself that paid for the support of the anti-Russian regime in Ukraine.

All the same, neither the EU nor the US can immediately stop the supply of Russian gas.

Creating alternative supply chains that can replace Russian fuel takes time.

Of course, the Americans would very much like to completely remove all Russian gas from the market right now, but this is impossible, in which case a critical shortage of fuel will arise in Europe.

Plus, until 2024, there is a contract for Ukrainian transit.

Plus, the north-south corridor within Trimorye is not ready yet, there are problems with its financing.

• Yuzhno-Russkoye oil and gas field, Russia

• globallookpress.com

• © Nord Stream AG

- What threatens Russia with the implementation of all these plans?

Can they be hindered?

Or is it just necessary to look for alternative buyers in Asia, for example, and pull a network of gas pipelines there?

- First of all, regarding the implementation of these plans: they will not wait.

In order to prevent the implementation of this scheme, we must be clearly aware of what these plans are and what their ultimate goal is.

Be able to draw the right conclusions and see trends behind disparate facts.

In no case should we lose the European market — the schemes for Russian exports to Europe and the material assets to ensure it in the form of a capital-intensive cross-border stationary gas transmission system have been formed over many decades, we must not abandon this legacy.

We do not have such bad prospects in this regard as it may now seem.

It is not certain that the US will be able to further increase its LNG exports to Europe.

Today, most US shale gas producers are heavily leveraged.

And now they are faced with a dilemma: to invest the profits in increasing gas production, or to reduce the level of their debt to acceptable levels.

Now the prevailing view in the United States is that reducing the credit burden is a priority.

Over time, the overall consumption of fossil fuels in Europe will decrease due to the improvement of energy-saving technologies and the development of alternative renewable energy.

However, this decline will not be drastic, since the possibilities of renewable energy are very limited, it is highly dependent on weather conditions.

Also, do not forget that gas is in demand not only by the energy complex, but is also a raw material for the chemical industry.

However, even if the European market is preserved, we still need to build and expand the gas transportation infrastructure in the eastern direction.

And most importantly, to develop our own domestic market more actively: in Russia, a huge number of settlements are still not gasified.

Together with Asia, we must create not just a separate gas corridor like the Power of Siberia highway, but form an extensive infrastructure similar to that created in Europe.

The goal is to close together all three markets, European, Asian and domestic, within the framework of the formation of a single Eurasian energy space that is already taking place today.