The secret Soviet council which established the Kremlin’s gas monopoly on Europe 

A newly laid pipe reads, "Pipe to your sanctions, Mr. Reagan" (the "pipe for something" is a Russian idiom meaning "failed, done, kaputt"). Construction works of the Urengoy–Pomary–Uzhhorod pipeline. USSR, 1982. Photo: Public Domain

At the peak of Cold War tensions, the Reagan administration was afraid that a new high capacity gas pipeline will give the USSR an energy leverage over Western Europe as well as well as the gas export revenue could be used for the military purposes. In 1981-1982, the US imposed sanctions preventing US companies and their subsidiaries in Europe to export oil and gas technologies to the USSR. Europe allies refused to boycott the pipeline then.

History repeats itself with the Nord Stream 2, which was recently green-lighted by Germany. 

Op-ed, Ukraine

Article by: Ivan Diyak

The Russian Gazprom Corporation, one of the Kremlin’s instruments of political and economic pressure on European countries, began its aggressive actions not today nor even recently – they are a continual development of a strategy dating from Soviet times.

The Russian gas monopoly’s recent endeavor to block import to Europe of natural gas from the Middle East and to lobbying for the construction of the Nord Stream and South Stream gas flows which bypass Ukraine is also part of this strategy. Unfortunately, with the help of lobbyists such as the former chancellor of Germany Gerhard Schroeder (who today sits on the board of directors of Gazprom), the Kremlin has done much to ruin a unified gas market within the European Union.

It is true that hope has lately arisen that these expansionist plans of the Kremlin would be exposed and blocked. The Telegraph, a British newspaper, recently published sensational material from the investigative commission of the EU, which uncovered “Vladimir Putin’s abusive stranglehold over European gas supplies.”

“The longest investigation in EU history found that the Kremlin-controlled energy giant Gazprom has used its enormous power to pressure vulnerable states in Eastern Europe, and to fragment the EU’s unified energy market with coercive pricing policies,” the article begins, and adds that “Germany has been enjoying a sweetheart deal with Gazprom, gaining a competitive advantage in gas costs at the expense of fellow EU economies and leaving the front line states at the mercy of Moscow’s strong-arm tactics.” The Telegraph also announces, that “one-hundred pages, leaked from the European Commission, paint an extraordinary picture of Gazprom’s predatory behavior, as it behaves like a ‘police service’ for Russian foreign policy.”

About the author

Ivan Diyak

Ivan Diyak is a corresponding member of the Academy of Mining Sciences, an acting member of the Oil and Gas Academy of Ukraine, an honored Professor Emeritus of the Ivano-Frankivsk Mechanical University of Oil and Gas.

From 1972 to 1998, he was Deputy Executive and Deputy Head of Administration of the Ukrgazprom company. From 1998 to 2002 he was a Member of Parliament and assistant head of the Sub-Committee for Matters of Gas Industry in the Verkhovna Rada Committee for Energy and Nuclear Policy and Security.

From the 1970s until the collapse of the Soviet Union Ivan Diyak, in accordance with an order issued by the Ministry of Gas Industry of the USSR, was employed in the development of the Urengoy Gas-Condensate Deposit and he began work on the deposit at Yamal. At that time over 4,500 Ukrainian specialists were employed around the clock on the oilfields. Thus having the capability to observe, from the inside, the formation of the USSR’s energy politics, Diyak knows what was the goal of the leadership of the Soviet Union and he sees that the current master of the Kremlin strives to realize the same strategy.

1982 Secret Council at Novy Urengoy

“The gas, which Russia extracts and heats nearly half the world, has always been a weapon, and a weapon of insecurity.” — Valeriy Paniushkin, Mykhailo Zyhar in the book “Gazprom – Russia’s New Weapon

In 1982, a secret council was held in Siberia at Novy Urengoy under the leadership of Nikolai Baybakov, the deputy head of the Soviet Council of Ministers and the head of the State Planning Agency of the Soviet Union.

The deputy Minister of Gas Industry Viktor Chernomyrdin [who later became Russia’s prime minister in the 1990s, Russian Ambassador to Ukraine in 2001-2009] also took part in this council, along with the first Secretary of the Tyumen Oblast commission and the Novy Unregoy municipal party. Workers were represented at the meeting by the heads of regional gas conglomerates. I was there from Ukraine, as deputy head of Ukrgazprom, to represent the work of Ukrainian industries at Urengoy. We sat in a special, sound-proofed conference room.

Two questions were examined during this council. The first, regarding the perspective of exploiting new deposits, was answered by engineers, while the second examined the influence of energy resources on the foreign policies and economies of the countries of Europe.

[Deputy PM] Nikolai Baybakov, who put forward the second question, citing available resources of energy carriers after the opening of the new deposits in Yamalo-Nenets Kray, tasked the engineers with sharply increasing the extraction of natural gas and oil.

He explained that the Central Committee of the Communist Party of the Soviet Union (CPSU), in line with its foreign policy objectives, had ordered the construction of gas pipelines which would allow exporting up to 70% of the natural gas Western Europe required and make European countries totally dependent on Soviet energy resources.

Baybakov announced that at the completion of this assignment from the CPSU (an assignment from Soviet leader Leonid Brezhnev personally), the USSR would be able to influence Western Europe both economically and politically. Moreover, this would bring the influence of the United States on European countries to a minimum, and that would help transform the USSR into the only global superpower.

Soviet cartoon of 1982, the torn paper reads, “Sanctions against the construction of the gas pipeline.”

The USA guessed the Kremlin’s tactics, and when construction began on the “Urengoy-Pomary-Uzhhorod” pipeline, Washington instituted an embargo. But the USSR used false companies to purchase compressor-stations and other equipment, and the pipeline was completed and began operations.

I believe that the call, at that time, from the US for European countries not to allow their imports of gas from a single country to be more than 30% of what they needed was connected with the construction of the Soviet pipeline.

Unfortunately, this warning was ignored, and today a number of European countries depend on Russian gas for 70% to 100% of their needs. The current global practice dictates that dependence on a single source for over 30% of a country’s energy needs constitutes a threat to national security.

Clearly, Vladimir Putin strives to realize the former plans of the Politburo regarding the use of energy carriers for geopolitical ends.

Remember that in 2003 the Kremlin unveiled the Energy Strategy of Russia for the Period until 2020,” in which Moscow took a course towards the creation of an “energy” state, that is, the use of energy resources as an instrument of force for its own geopolitical power.

This document also declares the necessary role of Russia in the development of a global energy strategy, for which it plans the establishment of control over oil and gas providers in neighboring countries, so that Moscow may dictate its own conditions and costs.

Importantly, today the gas-pipeline systems of Belarus, Bulgaria, Serbia, Slovakia, Moldova, Latvia, Estonia, and Finland are either fully or partially controlled by Gazprom. Thus Gazprom brings into its hands Europe’s pipelines and underground reserves of gas. Ukraine, which maintains its own possession of the largest pipeline and gas reserves in Central and Western Europe and thus impedes the Kremlin’s plans, enrages Moscow like a bone in one’s throat.

Gazprom tried to provoke a man-made catastrophe in 2018

To convince European countries of the necessity of building a new pipeline which bypasses Ukraine, Moscow frightens Europe with slogans about Ukraine’s “inability” to provide the expected transit of gas and organizes gas crises in the middle of winter to this end, as has already occurred in 2006 and 2009.

First, on 1 January 2006 Gazprom over only two days reduced its total export of gas by one-third, clearly believing that this would be sufficient to essentially solve the “Ukrainian Problem.”

Then, from 1 January 2009, Gazprom began reductions of gas exports to Slovakia, and two weeks later began a general embargo of gas shipments to Ukraine.

De facto, the actions of Gazprom resembled a military operation [in the winter of 2009], and all of Europe was dragged into the conflict after the shipment of Russian gas to Moldova, Romania, the Czech Republic, Slovakia, Bulgaria, Serbia, and Croatia completely stopped, while shipment to Germany and Italy partially stopped.

Russia clearly showed that in the pursuit of its own interests it does not bother about the problems of “little” European countries, not even those, like Serbia or Bulgaria, of which Moscow speaks as friends.

At the same time, the Kremlin and Gazprom in unison blamed Ukraine for the halt in transit, insinuating Ukraine’s gas transit system no longer worked. Of course, these accusations were no longer new, because Russia had earlier used the same arguments to convince European countries to take part in the building of pipelines which bypass Ukraine.

But this time last March, surely to put Ukraine “on its knees,” Gazprom tried to provoke a man-made catastrophe. Only the skilled work of specialists from Ukrtransgaz and Naftogaz Ukrayiny prevented the disaster. Seeing this, Gazprom, to recover its own reputation, reached a commercial agreement after long discussions to renew transit through and the delivery of natural gas to Ukraine from 20 January 2009 onwards.

However, Moscow’s long-repeated anti-Ukrainian propaganda has led Europe to fear a conflict with Russia, and Europe gradually begins to play by Moscow’s rules and with gives Ukraine up with its own actions. Unfortunately, in Europe until now there are plenty of politicians who count on appeasing the aggressor, or, like former German Chancellor Gerhard Schroeder, work to advance the aggressive plans of the Kremlin, forgetting that such actions already led to two world wars.

Sources of gas in Russia and in the Near East

Today there are no large reserves of gas in Russia. Basically, there exist two large deposits: the Shtokman field, 300-350 meters below the surface of the Barents Sea (its reserves are evaluated at 3.3 trillion cubic meters of gas) more than 600 kilometers from Murmansk, a transpolar city in the far northwest part of Russia, and the Bovanenkovo field in Yamal, which together with other deposits has a reserve of 9.3 trillion cubic meters.

In general, Russia accounts its estimated reserves at 48 trillion cubic meters. However, Iran and Qatar have reserves of nearly 28 trillion and 26 trillion cubic meters, respectively. The entire Middle East has reserves of 79 trillion cubic meters, that is, twice as much as the estimated Russian reserves.

Russia understands this well and counteracts the exploitation of these reserves. The first step was the building of the Blue Stream to Turkey on the seabed of the Black Sea. Rem Viakhirev, the former head of Gazprom, told me honestly that the building of the Blue Stream had as its goal the prevention of gas exports from Iran to Europe.

“You understand, if Iranian gas goes to Europe, we fall apart. First, Iran has huge reserves of gas, the cost of extraction of which is much lower than in Russia. Second, we would lose the monopoly on the European gas market, and we would be out-competed,” he said.

This concerns the Nabucco gas Pipeline, the building of which Russia blocked, offering instead to build the Nord Stream-1. Once it was finished, Russia began to push forward the Nord Stream-2.

Map of expected import of gas to Europe according to available gas resources (in trillion cubic meters). Data: golos.com.ua, map: Euromaidan Press, map layer: Google Maps.

Gas Resources (in trillion cubic meters) in the countries of the Middle East:
• Iran – 27.8
• Qatar – 25.6
• Saudi Arabia – 7.17
• United Arab Emirates – 6.09
• Iraq – 3.18

All this was planned to be completed before 2020 because Russia desires to keep its monopoly on gas deliveries to Europe and to determine its price.

If European countries do not understand that Chekist Putin is continuing the energy politics of the USSR, then they are in for hard times. It is not possible to be so totally blind that one cannot see where such politics will lead.

Project Nabucco

The building of the Nabucco gas pipeline was supposed to have begun in 2008. It should have gone through the territories of Turkey, Bulgaria, Romania, Hungary, and Austria. The planned length reached 3300 kilometers, and the projected capacity after expected conclusion of construction in 2020 would have reached 31 billion cubic meters per year.

This gas pipeline was considered a “gas bridge” between the Caspian region, the Middle East, and Europe, and its construction would have brought on a diversification of deliveries of gas and a growth in competition on the European market.

Potentially, Azerbaijan, Egypt, Iran, Iraq, and other countries of the Near East and Caspian could have become suppliers to Europe. 79 trillion cubic meters of natural gas would have become available.

The creator and coordinator of the Nabucco project was the Austrian holding OMV International GmbH, a consortium which would have included Turkish, Bulgarian, Hungarian, Romanian, and Croatian companies. The estimated value of the pipeline reached EUR 7.9 bn.

However, Russia, for already explained reasons, did everything to prevent this alternative variant of gas delivery to Europe.

During a trip to Iran, I asked a representative of French gas company why a pipeline between Iranian deposits and Europe is not being built. He gave one answer: regardless of the size of the gas reserves, building a pipeline in the unstable Middle East was too risky.

The important question today is whether previous conflicts and the current war in Syria, which Putin aggravates, are methods of freezing the gas pipeline from the Middle East to Europe.

Despite this everyone can clearly understand that the operation of the Nabucco pipeline would have ended Moscow’s domination over the natural gas market, because European countries would could choose who to buy gas from.

Then Russia would no longer be able to dictate the conditions, it would be required to adhere to European gas market regulations.

Nord Stream-2 as an instrument of Russian Aggression

Unfortunately, we must state that Putin is close to accomplishing his goal: with the help of high-placed European lobbyists, such as former Chancellor Schroeder, Putin commissioned the construction of Nord Stream-1 instead of the Nabucco pipeline, which would have ended Russia’s monopoly. Today Schroeder been rewarded for his lobbying by a seat on the Gazprom board of directors.

Gazprom and the German companies E.ON and BASF are both involved in the Nord Stream 2 project. This alternative to the Ukrainian gas transport system has a pipeline over 1200 kilometers long linking Russian Vyborg with German Greifswald. Its capacity is 19.7 bn cubic meters per year.

In 2009, Putin stated in Berlin that the Nord Stream-2 could be compete before 2011 and that its total capacity could reach 50 billion cubic meters of gas per year. However, this project was frozen due to opposition from many European countries and the USA.

Nevertheless, the Kremlin still tries to have its way. And now, despite statements by Poland, the Baltic countries, and Denmark that the construction of Nord Stream-2 would increase Europe’s dependence on Gazprom, Germany once more gave its blessings to a new construction.

Ukraine, meanwhile, would lose an annual income of $2 bn from gas transit to Europe if Nord Stream-2 is built.

Even though today European lobbyists serving the Kremlin continue to tell stories about how Nord Stream-2 is essentially a commercial project composed of German, Austrian, and Dutch companies, the former German Ambassador to Ukraine, Dietmar Stüdemann, in a recent interview explained that it is well understood in Berlin that Gazprom is a political instrument of the Kremlin.

Stüdemann believes that  the Nord Stream-2 ”…is not necessary for Germany, it is not critically important for our economy,” and that “the ways in which Russian Gazprom behaves, show that Gazprom is not so much a business as a political instrument which the leaders of the Russian state exploit.”

Unfortunately, there are many in Europe who do not or will not understand the ways in which they have become dependent on Russia. 


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Translated by: Peter Koropey
Edited by: Yuri Zoria
Source: Holos Ukrayiny

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