Since 1991, Gazprom has built a number of gas export pipelines: Blue Stream, Yamal-Europe, Nord Stream, Turkish Stream and Nord Stream 2, in chronological order. Besides talking about the West, let’s not forget about the Soviet Northern Lights system, which was and is used to supply gas to Belarus and until 2022 to the Baltic republics and Finland; Kaliningrad Oblast — via transit through Belarus and Lithuania. Until 2017, Gazprom was an equity member of the Estonian, Latvian and Lithuanian gas companies, which led to an extensive campaign to upgrade the line sections and compressor stations of Sijania Severa, as well as the region’s only large gas storage facility, Incukalns, in Latvia. This not only ensured the normal flow of export supplies, but also increased energy security for the whole adjacent Russian territory: in winter, gas supplies from Incukalns are used to supply the Pskov, Novgorod and Leningrad regions, as well as St. Petersburg.
Regardless of the terrorist attacks on the Baltic Sea floor, by the end of September 2022, deliveries had ceased completely: Nord Stream, Yamal-Europe, Nord Stream 2 had not even started, and supplies through the Northern Lights were drastically reduced because the Baltic republics and Finland rejected Gazprom’s offer to pay in roubles for gas. Circumstances that are particularly worrying are:
- The gas transit agreement with Lithuania expires at the end of 2025;
- The ability to use Incukalns’ UGS services is conditional only on a lease agreement for part of the active capacity.
At the same time, all measures required to ensure gas supply to the Kaliningrad Oblast have already been taken: the only regasification terminal in Russia has been built, Gazprom has purchased FRSU Marshal Vasilevsky and this autumn has commissioned a medium-tonnage LNG plant at the Portovaya CS in the Leningrad Oblast. Supplying our western exclave with LNG has been proven twice in practice — all the components of such a complex route work smoothly and there are no remarks about such logistics. Besides, Gazprom is continuing to further expand UGS facilities in the underground rock salt reservoirs in the Kaliningrad oblast, in the immediate vicinity of the regasification terminal. There is no information on item 2 in the open sources, which is understandable in the current conditions, but it does not remove any caution.
A separate issue of direct relevance to the situation of non-operational gas pipelines is the supply of heat and electricity to St Petersburg and the Leningrad region. The heat supply is provided by combined heat and power plants, and there was already a problem in the early 2010s when Estonia, in the north-east of which an additional oil shale-fired power plant was built, refused to import electricity from the Leningrad region. The winter power surplus was cushioned by the construction of additional transmission lines and substations that enabled power to flow from the Northwest UPS to the Center UPS. Due to the commissioning of two new power units at Leningrad NPP using VVER-1200 reactors, which are 200 MW more powerful than the RBMK-100 units that were decommissioned, the same problem has increased again. In winter, the Leningrad Region needs heat, the combined heat and power plants generate electricity at the same time as heat, and it is impossible to separate the two processes. In 2021, the problem was solved by InterRAO, which multiplied the supply of electricity to Finland through the DC link near Vyborg, which has been operating since the late 1990s. However, in May this year Finland refused to import electricity from Russia, so we cannot rule out difficulties with heat supply to the Leningrad region and its capital already in the coming autumn/winter period. Technically, only one option is feasible — to reduce generation capacity at the new units of the Leningrad NPP, but this cannot be considered the best and most economical way. It is much more reasonable to invest in new energy-intensive production facilities, only this will ensure the operation of the North-West UPS in a mode that ensures both a confident passing of the autumn-winter period and full use of generation at the Leningrad NPP.
Let me remind you of the transit capacity of the stopped pipelines in the western direction: each of the Nord Streams is capable of supplying 55 bcm per year, while the Yamal-Europe pipeline is capable of supplying 33 bcm per year. As for the Northern Lights, the volume of supplies decreased to about 10 billion cubic meters: about 7.5 billion cubic meters were not purchased by the Baltic Republics and Finland, the supplies to Belorussia decreased by 2.5 billion cubic meters due to the commissioning of the first power unit of the Belorussian NPP. At the end of this year and early next year, the second unit is expected to be commissioned, which will reduce gas supplies by another 2–2.5 billion cubic meters per year. The total volume of reduced supplies in 2023 will thus amount to about 155 billion cubic meters. At the same time, the entire onshore part of all the above mentioned pipelines is technically sound, with only European and Belarusian demand having problems. It is not possible to stop these pipelines completely in Russia either, as they provide gas to several Russian regions. Providing them with operating pressure is a separate technical task that requires additional investment. There is no information from Gazprom in this respect, and there is no information about the proposal made by the Governor of the Murmansk Oblast during the meeting with the President in May this year which was supported by Putin. Andrei Chibis suggested reanimating the old project of gasification of the Murmansk Oblast by means of a gas pipeline from the Leningrad Oblast through the territory of Karelia. The project is interesting and necessary, but how to solve the problem of laying the MGP on granite soils in Karelia could not be solved in Soviet times, and there is no information that such a solution is being developed now.
To summarise. There are pipelines to Russia’s western borders with an unused transit capacity of at least 150 bcm. The “heat/electricity generation” problem in St Petersburg and the region is growing. The prospects for further cooperation with Latvia on the Incukalns UGS are not clear. There is no information on whether these issues are being discussed in Gazprom and the government. If there is a calculation in these organisations only to re-establish full cooperation with EU member states, this only indicates the growing potential risks of disruption to the security of supply of heat and electricity to the entire north-western region of Russia. The only economically justified way to solve all these problems seems to be the rapid development and immediate implementation of new projects related to gas processing. Such production is energy intensive enough to completely eliminate the “heat/electricity generation” problem in St Petersburg and the region. If the government invests part of the surplus foreign trade balance into the construction of ammonia and/or nitrogen fertiliser plants, the following additional results are possible:
- creation of additional jobs in the depressed Novgorod and Pskov regions, additional jobs in the Leningrad region;
- implementation of similar projects based on the Grodno and Rechitsa GPPs will dramatically enhance integration processes in the Union State;
- there will be new volumes of products in demand in a hundred foreign countries, with products more marginal than unprocessed natural gas;
- there will be additional justification for the development and implementation of a state shipbuilding programme;
- there will be economically feasible projects to expand the railway network in the Smolensk, Pskov and Novgorod regions, which in the current external environment can also be regarded as a rocky road.
Each of the proposed projects could be elaborated further, which will soon be done by the Expert Council of the Aurora news agency.
Cover photo: DPA
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