Slovakia Ukraine Gas

Ukraine’s Prime Minister Arseniy Yatsenyuk delivers a speech in 2014 during an official opening of a natural gas pipeline in Velke Kapusany, Slovakia that started shipping natural gas from western Europe to Ukraine. Historically, Ukraine has been dependent on Russia for its natural gas supply but has been trying to develop other sources, both in western Europe and its own domestic supplies. In that context, Ukraine’s natural gas companies are seen as strategic assets to help free the country from Russian domination. Our editorial at left looks at how natural gas is a big part of Russian, Ukrainian and European politics, context that matters for both the current impeachment controversy and perhaps even the development of the Mountain Valley Pipeline through West Virginia and Virginia. The flags at left? From left they are the flags of Ukraine, Slovakia and the European Union.

Here’s a riddle for you: How is the Mountain Valley Pipeline connected to the controversy — perhaps even an impeachable controversy — over President Trump’s attempt to get Ukraine to dig up political dirt on Joe Biden?

The answer is a broad one: The global market for natural gas.

Pipeline executives say the gas that will flow through the MVP is intended for the domestic market in the Southeast but haven’t ruled out exports. A minority partner said in 2016 that it’s possible some of the gas it bought could wind up being exported to India. In any case, it’s hard to talk about the domestic market for natural gas without pointing out that natural gas exports have surged over the past 15 years. For years, the nation’s natural gas exports were barely measurable. But since 2000, they’ve jumped from 0.24 trillion cubic feet to 3.61 trillion cubic feet last year — a 15-fold increase. You can thank (or blame) the fracking of the Appalachian shale fields. President Trump has been an especially vocal pitchman for natural gas exports. Even if no Mountain Valley Pipeline gas goes overseas, it indirectly helps send other American natural gas overseas by increasing the nation’s surplus of natural gas. That leads us to the global market for natural gas, and once we start talking about that, it’s hard not to talk about Russia, which means it’s hard not to talk about Ukraine.

If you came here expecting dirt on Biden — or on Trump, for that matter — you’ve come to the wrong place. Consider this context. The supposed dirt Trump was looking for, and sending his underlings off to find, concerned the fact the Biden’s son served on the board of a Ukrainian natural gas company. Our interest here, though, isn’t presidential politics, but the politics of natural gas.

Ukraine uses a lot of natural gas — that’s where about 30% of the nation’s energy comes from. It also has to import much of that natural gas. Historically, the main source of that gas was neighboring Russia. Here’s where things get interesting. Relations between Russia and Ukraine are complicated, to say the least. Generally speaking, politicians in Moscow see Ukraine as a natural part of Russia. Politicians in Kiev do not. You can imagine that creates a certain amount of tension. Imagine how Canadians might feel if the president of the United States declared that they were really Americans, and sent in troops to bite off parts of Ontario. Earlier this summer, here’s what Russian President Vladimir Putin said in an interview with the American filmmaker Oliver Stone.

Putin: I believe that Russians and Ukrainians are actually one people.

Stone: One people, two nations?

Putin: One nation, in fact.

Stone: You think it is one nation?

Putin: Of course.

That’s not the kind of talk that calms nerves in Ukraine. Ukrainians, keen to remain independent, have to deal with some inconvenient facts. One is geographical: The Russian bear is their eastern neighbor. That’s why the new president of Ukraine was so eager to get the military aid that Trump was holding up; the key piece was anti-tank weapons to use against the Russians who have seized the Donbass region. The other is economic: Ukraine depends on Russia for much of its energy — coal for its coal plants, uranium for its nuclear plants, and natural gas. Forbes magazine wrote earlier that year that until Ukraine can free itself from its dependence on Russian energy, “it will not be able to enjoy true economic and political independence.”

Ukraine can’t do much about being dependent on Russia for coal and uranium, but it can do something about natural gas. It’s begun switching from buying Russian natural gas to buying natural gas from Europe — principally Hungary, Poland and Slovakia. It’s also been trying to develop its own domestic natural gas resources. In that context, the natural gas company that Hunter Biden worked for wasn’t just an energy company; it was part of the nation’s attempt to wrest itself out of Russia’s claw-like grip. That might explain why the company— Burisma — recruited some prominent Americans from both parties to serve on its board. Biden was one; so was Joseph Cofer Black, a former intelligence official and ambassador under George W. Bush. You can argue, of course, whether Hunter Biden was cashing in on his father’s position, but from Burisma’s viewpoint, it was simply trying to make some much-needed friends in Washington because the country lives in dread fear of Moscow. (Earlier this year, we at The Roanoke Times hosted a group of Ukrainian journalists who were visiting the U.S. to learn how the news media works here. When they flipped through a copy of the paper and found a picture of Putin, well, we couldn’t understand what they were saying, but we sure understood exactly what they meant. They were not fans of Putin.)

Ironically, while Ukraine is dependent on Russia for much of its energy, Russia is dependent on Ukraine, too. Russia sells a lot of natural gas to Europe — principally Germany. Those natural gas lines run under Ukraine. For now, Russia pays Ukraine “transit fees” for the right to do so. However, Russia is also building other pipelines to Europe that will bypass Ukraine — the main one is the Nord Stream 2. Once Nord Stream 2 is operational, Russia won’t need those Ukrainian lines as much. That means less revenue for Ukraine — and perhaps more danger. As Forbes writes: If Russia doesn’t need those Ukrainian gas lines, that “means that the Kremlin will no longer have an economic reason to hold back its aggression in future conflicts. In sum: Ukraine’s economic and physical security benefits tremendously from Russia shipments.” That means Ukraine isn’t keen on Russia opening the Nord Stream 2 line to Germany. The United States hasn’t been either — not the Obama administration and not the Trump administration, either. Then-Vice President Biden warned Europeans that the new Russian lines were “fundamentally a bad deal” back in 2016. Last year, Trump berated the Germans for being too dependent on Russian gas — and urged them to buy American natural gas instead. Umm, Ukraine probably doesn’t want that. It wants Europe to buy Russian gas piped through the Ukrainian lines so it can collect the transit fees, but it’s probably too late for that — Nord Stream 2 is nearly done. Environmentalists wish they’d both switch to renewables. Like we said earlier, things are complicated. And as an MVP executive told the Roanoke County Board of Supervisors years ago: “Gas molecules flow all over the place.”

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