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In early 2021, three events took place in the Southeast European gas market, which will have long-term consequences for Gazprom’s business in the region and the European market as a whole, reports BGNES.
The Russian media covered only one of them: on January 1, Serbian President Alexander Vucic solemnly announced the start of supplying Russian gas to his country on a new route: through Bulgaria on the Balkan Stream, which became a continuation of the second line of the Turkish gas pipeline. flow. “However, a few hours earlier, on the last day of 2020, Bulgaria began receiving natural gas from Azerbaijan in the Trans-Adriatic Pipeline (TAP), completed a few weeks earlier. To emphasize the importance of the event, the Bulgarian Prime Minister , Boyko Borissov, visited the village of Kulata on the Greek border on January 1, where the compressor station is located. He said: “Starting today, total diversification!” In this way, he announced the end of the monopoly of Gazprom on the Bulgarian market, writes Deutsche Welle.
The third New Year’s event was the commercial operation of the new floating liquefied gas terminal on the island of Krk in Croatia. The resuscitator accepted a US liquefied natural gas tanker and began pumping blue fuel into the national gas transmission system connected to the European one. Thus, Croatia, which until now provided Gazprom with a de facto monopoly, can now not only diversify its suppliers, but can also take on the role of gas exporter, for example to Hungary and Ukraine. To assess the significance of these three events for Gazprom and the possible consequences for Russia’s gas supply to Europe, we will need to look at the export statistics of the Russian semi-state company.
According to 2019 data, the largest buyers of Russian gas in the Balkan Peninsula were Croatia (2.82 billion cubic meters), Greece (2.41 billion cubic meters) and Bulgaria (2.39 billion cubic meters) cubic meters). ). Serbia (2.13 billion cubic meters) ranks fourth in the region. The design capacity of the commissioned Croatian liquefied gas terminal is 2.6 billion cubic meters per year. In this way, Croatia had the hypothetical opportunity to completely abandon Gazprom’s services in just one night. It is unlikely to do so, but volumes purchased from Russia are likely to decline significantly. In any case, the Russian company will face serious competition in Croatia, which will inevitably put pressure on the price.
The competition will not only be in the Croatian market. Probably a significant or even larger part of the production carried out by the terminal on the island of Krk will be destined for export. The main buyer is believed to be Hungary, although Ukraine is also among potential customers. Hungary is an important market for Gazprom. In 2019, the company sold 11.26 billion cubic meters of gas there. It is to Hungary, and therefore to Austria, where the key Russian center Baumgarten is located, that a significant part of the gas that Russia plans to transport to Europe must be directed to Europe through the second ray of the Turkish current with a capacity of 15, 75. Bulgaria and Serbia are too small markets for such a large-scale project, not to mention North Macedonia (300 million cubic meters in 2019) and Bosnia and Herzegovina 0.24 billion cubic meters. For Gazprom, the laying of the Balkan Stream pipes from the border with Turkey through the Bulgarian territory and the inclusion of Serbia in the New Year is only an intermediate stage on the way to the main goal: the pipeline to reach Hungary, which will probably happen only in 2022. г.
For now, Gazprom will supply the Hungarian market, as before, through transit through Ukraine. However, Russian gas will now have to compete in this market with supplies from Croatia. According to the Croatiaweek portal, the capacity of the liquefied gas terminal on the island of Krk remains for the next three years, 80% is occupied until 2027 and around 50% – until 2035. Therefore, this competitor will be present at long-term and obviously it will be sought, although the regasification of liquefied gas is usually more expensive than that of the gas pipeline. If the start of commercial operation of this liquefied gas terminal means for Gazprom the loss of the monopoly position in Croatia and the strengthening of competition in Hungary, then, as a result of the launch of the Southern Gas Corridor, the Russian supplier loses its monopoly position in Bulgaria. it will face increased competition from Greece and Italy. And in this case, the battle will not be with liquefied gas coming from Qatar, Algeria or the United States, but with more profitable gas through the Azerbaijan gas pipeline.
The southern gas corridor is a two-pipeline system. Launched in 2019, TANAP delivers natural gas from Azerbaijan via Georgia along Turkey to the border with Greece. There it connects with the TAP pipeline, which passes through the territory of Greece and Albania and from there, to the bottom of the Adriatic Sea, reaches Italy. TAP’s capacity is 10 billion cubic meters per year, of which 8 billion cubic meters are destined for the main Azerbaijani gas customer in the EU, Italy. And Italy is the second most important Gazprom market in the EU after Germany. In 2019, the company delivered 22.1 billion cubic meters of gas there. In theory, after the commissioning of the Trans-Adriatic Pipeline, Russia’s demand for natural gas could fall by a third. Even more serious losses are expected in the Balkans.
Already in 2021, one billion cubic meters should flow through the TAP pipeline in Greece and Bulgaria. If we take into account that in 2019 the two countries together bought Gazprom approximately 2.4 billion cubic meters, this means that the supply of Russian gas to these two markets may fall by 40-45%, already low consumption due to a warm winter or prolonged and medium antiepidemic closure. In any case, Bulgarian Prime Minister Boyko Borissov’s New Year’s statement on the beginning of “full diversification” of gas supply and the invitation to visit Bulgaria announced on January 3 in a telephone conversation with Azerbaijani President Ilham Aliyev dan testimony of Sofia’s intention to buy as much as possible. Azerbaijani gas volumes.
It is possible that for purely technical reasons in 2021 Bulgaria will not buy 1 billion cubic meters of gas from Azerbaijan, as until autumn TAP supplies will be made through a temporary checkpoint near the Tower due to the unfinished IGB interconnector . This 182km pipeline will connect the Greek and Bulgarian gas transmission systems and with a design capacity of 3 billion cubic meters will allow Sofia not only to purchase Azerbaijani gas in its entirety from TAP, but also to export liquefied gas through the terminal. Existing Greek. liquefied gas (or through schedule). In the context of such fundamental changes in the reordering of gas market forces in Southeast Europe, the inclusion of Serbia in Balkan Stream is just a change in the route of the Russian gas pipeline in this relatively small country. Previously, the fuel passed through Ukraine and Hungary, and now, a year after the official commissioning of the Turkish current, it will pass through the bottom of the Black Sea, then through Turkey and Bulgaria. Serbia will obviously benefit from the rerouting and transit fees as, according to Interfax, the price of Russian gas has been reduced by $ 240 to $ 155 per cubic meter, increasing the competitiveness of Russian gas. At the same time, Gazprom has yet to make up its mind on the Kremlin’s strategic task of completely stopping gas transit through Ukraine.
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