Russia triggers off gas scandal in Poland

Official Warsaw is caught up in a big scandal after Poland’s EuRoPol GAZ and Russia’s Gazprom signed a memorandum providing for the construction of the Yamal-Europe-2 gas pipeline. Official Kyiv took a dim view of the situation, not only because of the amount of natural gas that would be transported outside Ukraine’s pipeline, but also because of Warsaw’s change of heart, considering that Poland has always supported Ukraine [since the proclamation of its national independence] and its EU membership effort. Crucial decisions can be made any day, with Ukraine-EU Association Agreement to be signed in May-June. Enough reason for official Kyiv to be seriously concerned.

Warsaw, however, has shown no change of heart toward Kyiv, according to a top-level statement made in the Polish capital, but certain questions remain unanswered. The whole memorandum-signing affair is like another 007 script, so those who are interested and can afford it are sure to come up with mysterious strings attached.

Moscow has done its best to get Kyiv implicated, trying to get additional means of influence on Ukraine, but failed, with Kyiv remaining dependent on its natural gas supplies.

Domestic factors were at play in Russia and Poland. President Vladimir Putin told Gazprom CEO Aleksey Miller to revive the Yamal-Europe-2 project. The abovementioned memorandum was signed shortly afterward, with a number of Russian experts wondering about its purpose, saying the gas pipeline project was a blind alley.

Dmitry Aleksandrov, Univer’s head of analysis department, says Russia is trying to upgrade the pipeline project because it has several objectives in mind: “First, this means diversifying Gazprom supplies to Europe, while keeping a tangible share of the European market; second, this means keeping Ukraine pressured; third, this means attracting partners from countries that remain a problem with Gazprom, with Poland being high on the list.”

RusEnergy’s consulting expert Mikhail Krutikhin believes that “our bureaucrats can finally realize that the Nord Stream natural gas pipeline project will not solve any problems, save for its expenses, for it will instantly confront the rules and terms of the European Union’s Third Energy Package; that investing $50 billion in Nord Stream will never produce the expected results. In other words, this new project that concerns Nord Stream and Great Britain boils down to another desperate attempt to show that Ukraine is being punished.”

I would like to stress the time when the bypass gas pipeline to Poland was made known and the time when Gazprom CEO Aleksey Miller found himself exposed to media attacks. This was preceded by PricewaterhouseCoopers’ analysis of the world energy market in conjunction with the Shale Gas Revolution. Experts said at the time that President Vladimir Putin pointed to that revolution in the US as the reason behind the lowering of the demand for Russia’s natural gas on the world market.

Aleksey Miller appeared on Russia Channel, shortly after the PwC report, to declare that “no one so far knows of any project in which the costs of drilling and getting shale gas would remotely be close to those [of conventional natural gas extraction techniques]. All such projects will be soap bulbs that will burst quickly, for all I know.”

A unique statement made by a ranking bureaucrat under President Putin’s command. Miller must have been playing a losing game, no longer able to keep the situation under control.

Moscow’s reputed DAY TV host Mikhail Leontyev was quick to accuse Gazprom CEO Aleksey Miller of falsehood, incompetence, and of failing to carry out the instructions issued by the head of state. Leontyev is known as the Kremlin’s mouthpiece, so his statement should trigger off another hullaballoo within Russia’s inner political elite.

There are other important reasons behind Aleksey Miller’s statement concerning the gas pipeline.

Most likely, the Gazprom CEO wanted to keep the investors calm, while the Russian giant company’s stock prices and capitalization were showing a dramatic decline (over the past several years). But if this company undertakes a project spelling billions of dollars, the stockholders will believe it to have a clean bill of health.

There is an obvious attempt to show that Gazprom is still ticking, even if for a short while (this would improve Miller’s image, considering that the man is under heavy enemy fire).

Pressuring Ukraine is one of the reasons behind the focusing on Poland’s gas supply problems. Poland is the key body politic in Eastern Europe. It’s less than friendly relations with Russia, along with its anti-Muscovite public opinion, remain the Kremlin’s headache. Moscow is well aware that any agreements between Kyiv and Warsaw would be bad news for the Kremlin, particularly in terms of gas talks. Moscow, therefore, is determined to at least lessen the possibility of such agreements (of course, they would be happy to put an end to them, period). Moscow relies on the good old bribe-giving and taking technique. What is better way to go about it than using the natural gas supply lever?

Moscow magnanimously offers Warsaw a big power supply bridge that will connect Kaliningrad oblast with Warmia and Mazury voivodeships. This power bridge is meant to keep Germany supplied with the Baltiiskaya Nuclear Power Plant’s electricity.

The Polish periodical, Dziennik Gazeta Prawna, reports that the other branch of the Yamal-Europe gas pipeline coincides with the news about “the present threat of stopping the construction of the Swinoujscie liquefied gas terminal,” a facility designed to handle domestic shale gas exports and/or liquefied gas imports. In other words, reviving the gas pipeline project Yamal-Europe-2 may be the Kremlin’s well-aimed attack against the Shale Gas Revolution, along with slowing down Polish investments and torpedoing liquefied gas imports.

Moscow is playing a big game, trying to influence Warsaw’s domestic policy, placing Donald Tusk’s Cabinet in a very embarrassing situation where none seems capable of keeping the situation under control, with some Cabinet members allegedly acting out of line. A very comfortable environment for the opposition.

Moscow jumped the gun, however, by signing the memorandum with EuRoPol GAZ. Vladimir Putin’s sycophants had wanted to pave his road to Germany. Le Monde reports that Putin met with Angela Merkel in Hannover and that Putin broached the subject of gas supplies and Ukraine.

Moscow is disturbed by the German company, RWE, helping Kyiv to free itself from Gazprom’s deadly embrace. One also has to bear in mind that the relations between Berlin and Moscow are best described as distanced a bit.

Similar memorandums should be expected before long, considering that Gazprom is in for shallow waters, and that its pressure on Ukraine is demonstratively increasing.