Russia Reveals "Plan B": Gazprom Says Gas Transit Via Ukraine May Be Stopped Completely

Tyler Durden's picture

A few days ago, when we wrote our "explainer" on the need for Russia to have an alternative pathway for its gas, one which bypasses Ukraine entirely and as the current "South Stream" framework is set up, crosses the Black Sea and enters Bulgaria before passing Serbia and Hungary on the way to the Central European energy hub located in Baumgarten, Austria, we said that "one short month after Putin concluded the Holy Grail deal with Beijing, he not only managed to formalize his conquest of Europe's energy needs with yet another pipeline, one which completely bypasses Ukraine (for numerous reasons but mostly one: call it a Plan B), but scored a massive political victory by creating a fissure in the heart of the Eurozone, after Austria openly defied its European peers and sided with Putin."

Today we find just what said Plan B is.

As Itar-Tass reports, citing Gazprom CEO Alexei Miller, "Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely."

"What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Miller told a briefing on Friday.

Clearly, this is bad news for Ukraine: Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.

The train has already departed. It seems it departed yesterday,” Miller said. “It belongs to no one. The GTS has no owner,” he said. “The GTS of Ukraine does not belong to Naftogaz but to the Ukrainian government. Before discussing things with someone regarding modernization and cooperation, it should appear on the balance sheet of this or that economic entity.”

 

“Property and legal issues should be resolved first,” Miller said.

In fact, the civil war torn country may soon lose all leverage it had with both Europe and Russia as a transit hub for natural gas, which also means that it is quite likely that Ukraine is about to be abandoned by its western allies who will no longer have any practical use for it. 

The Gazprom chief added that “a dozen Ukrainian laws need to be changed to be able to do something with the GTS.” 

Confirming that Ukraine's leverage at least with Russia is now effectively zero, Gazprom's CEO also said that “As for the continuation of negotiations with Ukraine, today there is no subject for talks. First, they must repay their debts."

“The gas price for Ukraine is fair - this price is fixed in the contract,” he stressed.

There have been no requests on the part of Ukraine’s national oil and gas company Naftogaz Ukrainy on a change of the transit deal with Russia, Alexei Miller said. Miller told journalists that it would be bad news if such requests had been received.

At least we now know what the Ukraine endgame will look like: as Russian transit through the country is completely cut off, the nation will lose all strategic importance first to Russia and then to Europe, which is still over-reliant on Russian gas (see map below), but which will increasingly turn its attention to the countries which the South Stream passes through.

And speaking of South Stream countries, there is increasing speculation that the main reason why none other than the poorest EU member country, Bulgaria, just suffered its worst bank run in 17 years, and one which has paved the way to early elections, is precisely that: to provide Europe with a government which will be more focused on Brussels' interests, instead of the current socialist regime, whose allegiance to the Kremlin is said to take precedence.

After all, now that Ukraine is yesterday's news, pay close attention to how Europe treats all the South Stream countries, starting with Bulgaria, and going through Serbia (read "Serbia could go bankrupt within a year and end up “in the position of Greece”, the country’s new prime minister has warned"), Hungary and of course, Austria.

Finally, and perhaps most notably, is last week's announcement by Gazprom CEO Miller that Gazprom has good chance, and is interested in discussing buying a stake in the Baumgarten gas hub (see more on why Austria is suddenly so important to both Russia and Europe here).

As Bloomberg reported previously, citing Miller, "The talks we had about South Stream also were a catalyst for the continuation of our talks about participating in the gas hub. We are interested and I think we can discuss a specific percentage of participation." The Russian gas producer and exporter discussed with OMV participating in gas trading in Baumgarten. Miller also added that work on South Stream link to Europe going on schedule, first deliveries to Bulgaria, Serbia, Turkey; capacity to reach 63bcm by end 2017.

In other words, as Europe and the US remains still focused on Ukraine, the one place which now matters most for Europe's energy future is Austria: a country where Gazprom, and Putin of course, are quietly sowing the seeds of Russia's energy dominance tomorrow. As for the feeder countries, especially Bulgaria, pay close attention as the US "foreign service" does all it can to destabilize the local government and financial system as a last ditch attempt to wrest Russia's trump card out of its hand. Something tells us Putin will hardly let it go easily.

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IronShield's picture

Yawn...  Isn't this $hit show over yet?

Top Gear's picture

Tool fans cue Vicarious.

Haus-Targaryen's picture

Good for Russia. 

Germany gets its gas, and the EU puppets in Ukraine freeze to death in the snow like morons. 

Manthong's picture

That would be pretty bad news for Noodleman and her sponsors at Chevron who paid $400 mil for what might be an empty pipe.

Arius's picture

"might" be an empty pipe ... might is the key word.  However, risk taking is nothing new for American investors, yes, they are shrewed businessman but they understand that investing is a risky proposition, sometimes you "might" (again) lose...

svayambhu108's picture

Good news everyone, the hurricane seasson is here:

http://www.nhc.noaa.gov/

Abi Normal's picture

So Russia is playing the hedgemoney game too.  You see, all forms of govt do this, not just the good ol USA.

Our Constitution prevents us from doing that, but we do not follow it - shame.

fervent in spirit's picture

WWI started with an Austrian being assassinated. Will history repeat itself 100 years later?

SafelyGraze's picture

if plan b is carried out, then what's the point of even having ukraine in nato at all?

sheesh

Manthong's picture

The US doesn’t get that nice port in Crimea, and maybe they don’t get control of any Russian gas, but there is still the farm land and the resources in the east (if the Kiev/US Nazi’s don’t level everything or nuke it like the braided bitch wants to do).

Then there is always the “fly in the Russian ointment” element.

Bananamerican's picture

What would happen if Putin took this case directly to the Bulgarian people? Or are the people as slack jawed there as they are here?
Good article by the way....

ParkAveFlasher's picture

There is no way that history can repeat, those dandy outfits would cost a fortune nowadays.

7.62x54r's picture

Same price as it has been since Roman times: one ounce of gold for a quality business suit. Doesn't matter whether it's a white wool toga, tails and top hat, or a modern three piece suit.

goldpercent's picture

Off topic, but for god sake, don't spend 14 hundred bucks on a suit. Take a trip to Thailand, pick up a few 300-400 dollar bespoke suits while you are there and you've paid for a pretty nice vacation, assuming you needed a suit.  Word of advice, don't get a red or a yellow suit.  Maybe I am missing something regarding the Western tailored 14 hundred dollar suit.  Is it bullet proof?  Does it allow me to print currency that folks will accept?  Can the ladies tell the difference?  Do they sew 50 silver eagles into the lining?  Are people really dropping 14 hundred bucks on a suit?  It's not like you can just wear the same one everyday.

stoneworker's picture

I have never seen somebody so focused on rejecting free stuff... Russia is paying for the pipelines if you don't want the gas don't buy the gas, but this Kabuki theater is absolutely ridiculous.

7.62x54r's picture

So Biden's son is now in charge of hundreds of miles of buried scrap metal.

Kewl.

knukles's picture

When you've got them by the balls their hearts and minds will inevitably follow.
    -Chuck Colson

99oakley's picture

Might work against Russian interests - once Europe is supplied via other pipelines, the Ukraine line can be reversed and Europe can resell Russian gas to Ukraine, thereby cementing its own control... It's not like the Russians can stop supplying Europe - currently their largest consumer.

The Chinese may want the gas, but it'll be 2019 before it begins to flow in that direction and it'll take another 5 years to get it up to scale. 

7.62x54r's picture

So what?

The Ukes will need to buy the gas retail from the EU, and they will insist on being paid with someone's cash.

kchrisc's picture

"Germany gets its gas, and the EU puppets in Ukraine freeze to death in the snow like morons."

What I understood from the article is a bit different.

I understood that Russia is going to try to diversify their routes to Europe, and that Europe is already putting in the fix on the proposed southern route.

My, and I am sure, many other's prediction, is that this will just push Russia to build pipelines to the east, a direction that cannot be easily hampered by the Rothschild controlled west.

Europe should just send Israel the keys.

MeMongo's picture

Topgear you are a "tool"!

suteibu's picture

My guess is that the script wasn't written for this event.  He's one and done.  Weak.

Freddie's picture

The Tyler's should add an extra button. Up and Down votes and also a Douchebag button for jerkoffs like "Top Gear."

7.62x54r's picture

I'm embarrased by the quality of the trolls my tax dollars are buying.

ZH Snob's picture

every time the west comes up with a lame policy for dealing with Russia Putin turns it around and beats them at their own sanctions.  it would be funny if it weren't so sad: sad for the USA, the country of my birth.

mrpxsytin's picture

I take it that you're one of the smart ones who have gotten out of America. Unfortunately most of your countrymen are so indoctrinated to think America is exceptional that they naively believe that the people can reverse the decline of America. Somehow they think America is different to all the countries that slipped into tyranny before them.

Arius's picture

with all due respect I think you are wrong!

 

Yes, America is exceptional for many reasons too long to explain in a simple note.  If you already do not know it, better get a history book and educate yourself.

 

Will america slip into tyranny?  never say never, but again, if you do your homework and read the history of the country and the love of people for liberty you will conclude at least not in our life times ...

 

Be an optimist - learn from Americans!

mrpxsytin's picture

Oh, don't worry. I've been learning an awful lot from Americans lately.

FeralSerf's picture

Australians have learned way too much from American fascism already. Their Hitlery gun control scheme is a good example. So is their compulsory voting and surveillance state.

fervent in spirit's picture

Aruis - being an optimist reminds me of the joke of the fellow who fell off a 20-storey building. As he dropped by the 10th floor he was heard saying, "So far, so good".

A certain amount of optimism is always commendable. But never at the expense of realism. And most Americans (for that matter most human beings) are NOT realists.

stoneworker's picture

You know who else thought he was exceptional? Hitler....in fact he was so exceptional that killing tens of millions of people that were not exceptional to him was ok, because they were not exceptional as he was. " Mrs. Gump: Did you hear what I said, Forrest? You're the same as everybody else. You are no different.

FeralSerf's picture

The world can thank those great Americans -- Wilson, Ford and Morgan -- for Hitler. He and Lenin too were Anglo-American inventions.

stoneworker's picture

Just out of curiousity what do you have against Lenin?...I know he brought about communism in Russia and all, but during his later years he was actually implementing Deng Xiaoping like reforms with his NEP program. I also know that he was funded by the German government during ww1, but I don't think he was a traitor to the Russian people.

7.62x54r's picture

Russia could have become a modern republic in 1917, and would have become one of the richest nations on the planet by now.

Instead, they got more than 70 years of socialist insanity. NEP was simply his admission that socialism was starting to fail. And the Party cancelled NEP the instant he was dead. There is no hell hot enough for Lenin.

stoneworker's picture

If given the choice between being a peasant under the tsar or a comrade under Lenin during NEP I know which one I would pick. Most people were illiterate and were treated as cattle this is why Lenin was succesful.

jaxville's picture

   Hitler was probably the greatest leader this world has ever seen aside from Jesus Christ. Take some time to learn what he was all about rather than spout the jew-centric potrayals of him that originate in our main stain media and hollywood.

  The issues Hitler had to deal with in Germany of the 1920's and 30's are the very same bringing America and most other Western nations to ruin. When you consider how vilified the man has become it is obvious that he was hitting the nail square on the head.

logicalman's picture

Hitler was just another example of the psychopathic 'leader'

He bears responsibility for millions of deaths, but compared to the victors, who got to write the history he wasn't in the same league as some others.

Stalin, Mao etc.

If his victims had been brown people, his name would not be so demonized.

Winston Churchill killed more Indians in 3 years than Hitler killed in total over a period of 6.

See The Great Holocaust of Bengall - few know anything about this.

http://www.samarthbharat.com/bengalholocaust.htm

DontNeedNoStinkinUsername's picture

Hitler the Evil eh . . .and we all seem to forget that history is written by the victor hence we have the current view of history. I too have done a lot of reading & I agree with your take on it completely. Forget the holoco$t most of the camp deaths involved Thyphus & at the end of the war mass starvation due to total disruption of transportation of food, etc.  A million plus German sodiers were imprisoned in open air feilds & left to die under Eisenhower. American soldiers who tried to give them food were courts marshelled and shot.  How are the usian pResidents going to be portrayed in years to come ??

Monty Burns's picture

"the history of the country and the love of people for liberty"

True as far as it goes but that's not very far. Because the 'people' you refer to are the descendants of the country's founding stock but they will within a few generations be reduced to a distinct minority.   The people who replace them will have very different attitudes to work, probity and liberty.  Exhibit 1, Eric ('my people') Holder, corrupt, incompetent and focused on grabbing what he can for his cronies and his own broader ethnic group.

Anusocracy's picture

It is the mental makeup of the typical American that has changed, and that will require a long time to correct.

Concepts of liberty, free markets, and property rights - ones not overridden by government decree - are very recent human social adaptations.

Ones not shared by the majority of the world's population, and consequently, the majority of America's immigrants.

The US will never be a 'free' country again.

logicalman's picture

How can a country be free?

Countries are divide and conquer, nothing else.

 

Freddie's picture

American exceptionalism?  Country taken over by evil open border douchbag criminals and the populcae and military do nothing.  Third world countries including Syria and Egypt are far more "exceptional."

The Egyptians took to the streets and drove Obama's Muslim Brotherhood from power.  Save the exceptionalism BS.   Cowards like General David Betrayus.

angel_of_joy's picture

I don't know about the future, but right now Americans turn out to be (more often than not) exceptionally stupid...

7.62x54r's picture

American exceptionalism was hauled out behind the courthouse and executed during the Wilson administration.

Nixon burned the corpse in 1971.

r0mulus's picture

at the very least, america has been in the grip of a silent tyranny since kennedy was assassinated.

it is likely that the roots of this tyranny extend back to the founding of the federal reserve.

even if not purposefully tyrannical, the economic system thus established would have spontaneously reorganized power networks in such a fashion. it is very likely that at least some of the participants consciously recognized this and, as is logical, acted as such in their own benefit.

by means of centralized inforamtion heirarchies, the abuses of this system have been hidden from us, who legitimize it with voting.

now that the internet has provided superior, decentralized information heirarchies, we are able to readily witness the abuses of this system for ourselves.

our naive yet pre-existing views of american exceptionalism come in to conflict with the reality of the abuses and outcomes as presented to us by the decentralized information heirarchies.

the cognitive dissonance thus produced pits arguments from authority of the centralized information heirarchies versus the decentralized heirarchies, armed with evidence and argument rather than heirarchical authority.

depending on how much an individual is willing to trust the argument from authority on faith, versus the empirical argument of constructed facts and evidence, will largely determine that individuals outlook on the current proceedings.

it seems pretty clear to me at least that you posess an incomplete understanding of the historical context, or you would not say such foolish things.

this is coming from a fellow american citizen.

swmnguy's picture

Speaking as an American, I'd say our biggest problem is that we don't understand history.  We read history that is written, long after the fact, in an authoritative, all-knowing voice.  We don't have an understanding of what it must have been like to live as a contemporary, when those events were happening.  As a result, what we see happening around us doesn't remind us of what we've all read in the history books because we don't know how current events will end up, and it doesn't occur to us that the events in history books were once current events with uncertain outcomes; so what comparisons can we make.

If we did have that perspective, we'd see the overall trend.  It's nothing special or unusual.  The globe's dominant Empire has passed its zenith and is declining.  That's all.  The disintegration can happen in a more, or less, orderly fashion.  I'd prefer "more orderly," as I live in a provincial region of the center of Imperium.  But if "less orderly" is what we will get, I've considered the outcome as well.

And yes, that "American Exceptionalism" nonsense is certainly obnoxious, isn't it?  Mere pandering to militant ignorance.  I'm sure every Empire has that cohort though.  Romans in 450 AD who kept ranting, "Well, why don't we just kill at the Goths?  What's wrong with our leaders that they don't see that?"  Or Winston Churchill types, making the most appalling racist attacks on Gandhi, to justify continued British Empire.

Hopefully we Americans don't go too far down the path of self-pity, though that's certainly a danger given our cultural proclivities.  If history teaches us anything, when a warlike nation starts feeling sorry for themselves, something horrible is about to happen.  Look at Germans and the "Stab in the Back" fantasy of WWI.

BruntFCA's picture

Have you read the stab in the back theory?

At the end of the war, believe it or not workers were on strike in munitons factories in Germany. These were intigated by Communists; the Communists went on to setup a temporary Government in Bavaria.

The peace that was agreed to in 1918 was an armistice or cease fire. Later, however, Great Britain continued war by other means by blockading Germany. The German government came to the table and signed the absurd treaty of Versaiile almost a year later in 1919, which even Churchill commented was, "monstrous" and "malignant". Sounds like Germany was stiched up real good to me.

Herd Redirection Committee's picture

This is why I try to read A LOT of history.  And to think about how events unfolded, not memorize dates! 

Trends, like changes in weaponry, changes in trade routes (like when the land-based Silk Route was finally made obsolete by the sea route, longer, but subject to much less extortion), technological developments, the advantages and disadvantages the Little Ice Age had for various nations...

And how empires collapse, wars start, revolutions happen...  People like to mention the Roman Empire, or the British, but I reckon the US might resemble the collapse of the Ottoman Empire more.  The Ottoman Empire was put on 'life support' for about 70 years  (1780-1850) while their 'allies' tried to figure out how to divvy it up (without letting Russia take Istanbul).  Hence the Crimean War, the Turks doing the bidding of the English and French, vs the Russians.

Even today Turkey, Germany and Russia have distinct geographic and cultural advantages (as pertains to the goal of dominating central Europe).

7.62x54r's picture

When the German high command asked the Kaiser to cut a deal, the Wehrmacht had less than 2 weeks of supply left. Food and non-inflated money was running out in Germany as well, so it was no wonder workers were starting to strike, communists or not.

The war was started by the serbs and the Austro-Hungarian empire, but France and Britain made damned well sure Germany got the blame. If anything, Hitler should be blamed on Wilson. If he had not intervened, the mess would have ground to a halt.

The French army was starting to mutiny in 1917. The wheels were literally falling off the Allies when the AEF was thrown into the cauldron.