Why Crimea Is First and Ukraine Potentially Second

Russia, Putin, Crimea, Ukraine, oil and gas.  The secession of Crimea from Ukraine is potentially a two-step process - Crimea and then Ukraine.  With Russia's Black Sea navy now safely ensconced in the only Russian warm water port, Sevastopol, they may look to the east at the remainder of Ukraine.  Why? Natural gas pipelines and economic/energy leverage.  The below map, World Energy Atlas 2004, shows the number of natural gas pipelines traversing through the country (on the right side of the map) along with gas fields (red blobs) and oil fields (green blobs).  

The number of gas pipelines and gas fields are numerous.  The northern set of pipelines run through Kiev and continue to Delina, Ukraine.  The central set of pipelines run from Kursk to Ivano-Frankovsk, Ukraine, just south of Delina, Ukraine. The southern set of pipelines run north of Crimea to Tiraspol, Moldova.  There is a large set of pipelines that run through Belarus and then bifurcates.  The northern bifurcation, Yamal Europe, goes from Minsk to just north of Warsaw.  The southern bifurcation, Northern Lights, leaves Minsk and heads south towards Delina, Ukraine.  There it meets up with the Brotherhood pipeline from Kiev.  As the pipelines exit Delina and surroundings, they continue on to Slovak Republic, Czech Republic and into Germany.

The Nord Stream pipelines, the newest gas pipelines, are not shown on the map, but would be roughly the red line at the top of the map and left of the fold.  It is an offshore natural gas pipeline from Vyborg in Russia to Greifswald in Germany.  The first line was inaugurated on November 8, 2011 and the second was inaugurated on October 8, 2012.  They are 1,222 kilometers in length with the capacity of 27.5 billion cubic meters (970 billion cubic feet).  Gas from Greifswald, then moves throughout Europe, through a network of pipelines  that split off these major arteries.  Together, these pipelines provide the dominant supply of natural gas to Germany and then Europe.

Germany is especially vulnerable because of their nuclear power changes after the Fukushima Daiichi nuclear accident in March 2011.  There was a quick German political decision to phase out its nuclear fleet by 2022, starting with the immediate closure of the eight oldest nuclear plants, representing 8.4 gigawatts of capacity or roughly half of their nuclear production (or 10% of electrical output).  Part of their energy plan is to phase-out subsidies for domestic production of hard coal and to decommission all hard coal mines by 2018, with substantial volumes of coal-fired capacity likely to be decommissioned.  Coal-fired electrical generation accounts for 45% of the total.  However, they are currently constructing several large new coal-fired power plants, representing one of the biggest investment waves into domestic coal capacities since the post-war reconstruction, according to the IEA.  However, the slack between the shutting down of the nuclear power electrical generators and the commencement of the new coal-fired electrical generators, will be made up with natural gas.  

So what has that got to do with this map?  With nuclear cut back by 10% (total) and coal being cut back during the same time, but before the currently under-construction new coal-fired power plants can be commissioned, the country is just above the break-even of supply and demand.  Any changes to the natural gas supply, immediately impacts gas-fired electrical generation.  

Should Germany and the rest of the EU get too demanding about Russian sanctions, Russia could shut down the Nord Stream immediately followed by the pipelines flowing through Ukraine.  This would place Germany into an immediate natural gas shortage and impact electricity generation.  Shutting down those pipelines running through Ukraine would further impact Germany and Europe.  Would Russia do this?  Maybe.  They twice shut-down natural gas entering Ukraine in the past 10 years (in 2006 and 2009).  I am not saying that Russia will shut-down the gas pipelines, but should the Western World impose too great a sanction against Russia, then all bets are off.