Tymoshenko puts new White Stream pipeline on EU table

Ukraine’s gas princess, Prime Minister Yulia Tymoshenko, appropriately donned in a white outfit, asked the European Union during her visit to Brussels to consider participating in White Stream  an alternative project for supplies of Central Asian gas to Europe. The Ukrainian premier stressed the need to lessen its energy dependence on Russia and then proposed her own thoughts. The previously unknown project has left experts checking their maps and scratching their heads about the feasibility of her proposal.
Tymoshenko proposed to commence the pipeline from Turkmenistan through Azerbaijan to the Georgian port of Supsa and then through the seabed of the Black Sea and through Crimea to the European countries. The pipeline’s capacity will be 30 billion cubic metres.
“This project can be much cheaper and more efficient, and we want Ukraine and the European Union to be partners in this project,” Tymoshenko said at a joint press conference with EU Commissioner Benita Ferrero-Waldner on January 29. EU Energy Commissioner Andris Piebalgs participated in a dinner with the Ukrainian premier in Brussels. The energy commissioner’s spokesman, Ferran Tarradellas Espuny, told New Europe on January 31 that Tymoshenko’s overall point is to avoid as many intermediaries as possible because now if Ukraine wants to buy gas from Turkmenistan, the gas has to go through Russia. Ukraine would like to get gas supplies directly from Turkmenistan through Georgia. “We don’t see anything wrong with that pipeline, we are not opposing that,” Tarradellas Espuny said. The White Stream volumes could go through the Ukrainian distribution networks and enter the EU. From Crimea, Central Asian gas could reach Romania and Bulgaria.
The new White Stream gas pipeline could be an alternative to the Nabucco pipeline, an EU-backed project planned from the Caspian Sea and across Azerbaijan, Georgia, the Black Sea, Turkey, Bulgaria, Romania, Hungary and Austria. But the EU energy spokesman said the Commission is not worried. “It will be more in competition with (Russia’s) South Stream than with Nabucco,” he said, adding that White Stream seems feasible. “Blue Stream is being done and it’s much longer and North Stream, which is much more complicated,” he said. He noted, however, that White Stream is between Georgia and Ukraine and “this way we’re not involved.”
Ronald Smith, head of research at Moscow-based Alfa Bank, told New Europe that White Stream is “probably just talk,” and he expects South Stream, planned by Russian gas giant Gazprom, to be the winning project, also prevailing over Nabucco. “That’s the one of all of them that has the most chances of happening just because Russia has a fair amount of leverage over the Central Asian countries,” he said. “The ideal route is via Russia, especially if you hook into the existing pipeline system for part of the way. Financially speaking, that’s probably going to have the advantage and, politically speaking, Russia carries a lot of weight in the region.”
It’s very important for Gazprom to keep control of all the energy exports that are coming from that region for its own price-setting reasons. The Russian gas giant doesn’t want to be competing head-to-head with Central Asian gas controlled by another party. “There is only so much gas that can come out of there. In fact, there is a question of how much gas actually is in Central Asia. Some of these projects are mutually exclusive,” the Alfa Bank head of research said.
Turkmenistan was surprised by Tymoshenko’s White Stream proposal. The Turkmen Foreign Ministry said in a statement that there is no point in discussing such initiative. The official statements on the construction of the international pipelines should be made by the energy-producing countries after relevant talks and consultations, the statement read.
The thing about gas, much more so than oil, is that the economics are controlled by whoever controls the pipeline. Liquefied Natural Gas needs large projects where pipelines are not an option. The most efficient way to transport gas is through a pipeline and whoever controls the pipeline becomes extremely important. “That’s the reason we’ve seen Ukraine and Russia arguing over transit gas going to Europe through Ukraine and arguing about the price Kiev pays for gas,” Smith said.
For this reason, Gazprom is building bypass pipelines that lessen its dependence on transit states. Russia supplies one-quarter of Europe’s gas, of which about four-fifths travels through Ukrainian pipelines.
At the same time, Ukraine plans its own projects bypassing Russia, hence White Stream. “It is another source of gas for their own uses and decreases the leverage that Russia has over them,” Smith said.