Author Topic: The Urengoy – Pomary – Uzhgorod Pipeline: a Cold War pipeline [A look back at the brilliance or Ronald Reagan]  (Read 205 times)

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Offline Rapunzel

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The Urengoy – Pomary – Uzhgorod Pipeline: a Cold War pipeline

 Pipelines International — September 2010

The 4,451 km Urengoy – Pomary – Uzhgorod Pipeline, constructed from 1982–84, is one of Russia’s major gas export pipelines, transporting gas from the Urengoi Field in Siberia to the west European natural gas network. At the time of construction the Soviet Government faced significant challenges in obtaining necessary pipe and equipment as a consequence of sanctions imposed by the US Government, which was fearful of western Europe’s potential dependency on Soviet gas.

In 1978 the Soviet Government proposed the construction of a pipeline from the Yamburg Field in Siberia to western Europe. When plans to develop the Yamburg Field were pushed back, the government decided to start the pipeline at the Urengoi Field, also in Siberia, which was already in production.

The Urengoy – Pomary – Uzhgorod Pipeline was a critical element of Soviet energy plans for the 1980s, allowing the USSR to export an additional 40 Bcm/a of gas to western Europe, effectively tripling export levels at the time.

The pipeline runs from Siberia’s Urengoi gas field to Uzhgorod in Western Ukraine, crossing the Russian – Ukrainian border north of Sumy. In Ukraine, the pipeline transports gas to Uzhgorod, which is located on the Ukraine – Slovakian border, and from there the natural gas is transported to central and western European countries.

To construct the pipeline the USSR required pipe and equipment from western Europe and Japan, as well as substantial credit from western banks.

Support for the pipeline project came from the governments of West Germany and France, eager to reduce their dependence on OPEC. Governments in both countries had entered into agreements with the USSR to import 10.5 Bcm/a and 8 Bcm/a of natural gas respectively from the Urengoi Field, and other countries in western Europe were negotiating to secure Soviet gas.

The pipeline project was not without opposition. According to a US congressional research paper, Soviet Gas Pipeline: US options, authored by John Hardt and Donna Gold, the US government was eager to prevent the pipeline, concerned that it would make western Europe overly dependent upon Soviet gas and thus vulnerable to potential threats by the USSR to turn the gas off in a political crisis.

Trans-continental construction

By 1982 the USSR had secured credit from a consortium of German banks including Deutsche Bank and AKA Ausfuhrkredit to finance the project, and had also awarded contracts for the supply of equipment and technology to use along the pipeline, which included the construction of 41 compressor stations requiring 125 gas turbines.

Julie Katzman lists the companies awarded the compressor station contracts in her paper The Euro-Siberian gas pipeline row, published in the Millenium – Journal of International Studies in 1988. According to Ms Katzman contracts were awarded to the UK’s John Brown (21 turbines), AEG-Kanis (47 turbines), and Italy’s Nuovo Pignone (57turbines). Nuovo Pignone was also contracted to construct 19 compressor stations and French firm Creusot-Loire was responsible for the construction of the other 22.

Contracts for the supply of 56 inch diameter pipe were awarded to German and Japanese firms Mannesmann and Japan Steel Works.

Line works on the route commenced in February 1982 and were undertaken by construction companies including Zakneftegazstroy and Tatnefteprovodstroy. A spokesperson for Tatnefteprovodstroy says that main construction works on the transcontinental gas pipeline were completed in around a year, which was three times faster than the average pipelaying speed at the time.

“The speed of pipelaying through the water-logged regions of Siberia to the western frontier of the USSR became an important milestone in the history of the domestic gas and pipeline industries,” the spokesperson said.

The pipeline crossed the Ural Carpathian Mountains and more than 600 rivers including the Ob, Volga, Don, and Dnepr.

First gas was delivered through the pipeline in January 1984.

Constructing pipelines in a Cold War climate

The US government, under the Presidency of Ronald Reagan, was opposed to the construction of the pipeline and used diplomatic pressure and economic sanctions to prevent its construction.

Initially President Reagan held talks with the West German and French heads of state at the 1981 Economic Summit – held in Ottawa, Canada – in an attempt to dissuade the countries from participating in the pipeline project.

His chief argument was that the additional gas deliveries would make the economies of western Europe dependent on Russian gas, therefore making the governments of those countries vulnerable to threats to cut the gas off in a political crisis.

However the Central Intelligence Agency (CIA) national intelligence report entitled The Soviet Gas Pipeline in Perspective, submitted to the Reagan Administration in 1982, advised that it would be difficult for the US to enlist western European governments in restricting trade to the USSR.

The CIA’s estimate concluded that alongside the economic benefits to be derived from construction of the pipeline for the western European nations, the governments in the region also saw the project as politically beneficial as it maintained ties with eastern Europe, restored a detente climate in Europe, and avoided exacerbating east-west tension.

In December 1981, in response to the presumed Russian involvement in the imposition of martial law in Poland, the US government imposed sanctions on the export of oil and gas equipment, including pipelayers, to the USSR.

Ms Katzman concludes that the effect of the sanctions were to make it difficult for European companies, which depended on the supply of parts from US company GE, to fulfil their contracts. However as France’s Alstom-Atlantique had been granted a licence to manufacture GE turbines prior to December 1981, John Brown, AEG-Kanis, Nuovo Pignone and Creusot-Loire had an avenue to obtain the necessary equipment to fulfil their obligations to supply turbines and construct compressor stations along the pipeline.

Japanese company Komatsu was a beneficiary of the US sanctions, accepting orders from for pipelaying tractors that had initially been awarded to Illinois-based Caterpillar Corporation.

In July 1982, the Reagan administration extended trade sanctions to cover all subsidiaries and licensees of US companies. This affected over 20 European companies, who were prohibited from exporting any equipment to the USSR that made use of American technology or components, including those already shipped to Europe, according to Ms Katzman.

Maintaining pipeline integrity

The Urengoy – Pomary – Uzhgorod Pipeline was completed on schedule and remains an important export line today, surviving the fall of the Soviet regime in 1991. Today, the pipeline transports 1.1 Tcf/a of natural gas from Siberia to western Europe.

In July 2010 Ukraine’s Fuel and Energy Ministry instructed Naftogaz to commence preliminary reconstruction work on the 1,160km Ukranian-operated section of the Urengoy – Pomary – Uzhgorod Pipeline.

The Ministry has instructed Naftogaz to provide funding and develop a feasibility study for the project, including materials of assessment of the impact on the environment.

The Ukrainian Energy Ministry aims to raise $US6.5 billion to modernise the entire gas transit network, with $US1.3billion allocated to the Urengoy – Pomary – Uzhgorod Pipeline.

Appeared in issue: Pipelines International — September 2010

Image caption: The Urengoy – Pomary – Uzhgorod Pipeline route. Source: US congressional research paper Soviet Gas Pipeline: US options authored by John Hardt and Donna Gold, 1982.

“The time is now near at hand which must probably determine, whether Americans are to be, Freemen, or Slaves.” G Washington July 2, 1776

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