S&P assumed as «Nord stream — 2» will affect the European gas transportation system

© Photo : Nord Stream 2 Corp. in TwitterТрубы for the construction of the pipeline Nord stream-2. Archive photoS&P assumed as «Nord stream — 2» will affect the European gas transportation system© Photo : Nord Stream 2 Corp. Twitter

New routes for gas imports to Europe, including the «Nord stream — 2» and the EU strategy aimed at increasing market flexibility and diversification of supply, will affect the creditworthiness of the operators of gas pipelines in Central and Eastern Europe (CEE), the report of the rating Agency S&P Global Ratings.

S&P experts believe that new routes for gas imports, such as «Nord stream — 2» (Nord Stream 2), the «Turkish stream» (Turk Stream) and the «southern gas corridor» (Southern Gas Corridor), transform the traditional business model of companies engaged in the extraction and transport of gas in Central and Eastern Europe. The Agency explains that «Nord stream — 2» and «Turkish stream», which should be commissioned by 2020, deploy significant volumes of energy supplies from the traditional route through Ukraine and, consequently, the countries of Central Europe.

«The creditworthiness of companies engaged in the transportation of gas is likely to be under pressure because of rising competition between routes, and increase the volatility of the transit volumes, the gradual expiration of long-term contracts with ship-or-pay (transportation arrangements for a fixed fee regardless of the volume of transported product. — Approx. ed.) on traditional routes and high capital requirements,» — said credit analyst at S&P Global Ratings Elena Anankina.

All of these factors, in Fitch’s view, lead to necessary additional investment in new gas pipeline infrastructure in the region.

However, the negotiated S&P, in the next three to four years this pressure will be mitigated even existing long-term contracts with ship-or-pay and subsidiary regulation. In addition, the Agency experts expect that the traditional route of gas transit from Russia to Europe through Ukraine will continue to be used, even in smaller quantities.

S&P assumed as «Nord stream — 2» will affect the European gas transportation system«Nord stream – 2»