A closer look at existing transit pipelines reveal that the operational experience had been dreadful in terms of disruptions which has been driven by economic factors (i.e. disputes over transit fees) as much as by political factors. History illustrates that few cross-border or transit pipelines have survived and prospered in politically volatile areas. In the Middle East the agreements for several transit pipelines had to be re-negotiated by pressure unilaterally exerted by transit countries (i.e. Iraq – Turkey pipeline).
After the break-up of the FSU, Gazprom has tremendous problems in dealing with the uprising demands of the new transit countries. Gazprom’s transit through Ukraine is under constant stress due to the unilateral price setting by Gazprom for gas –off takes; the dispute over the transit fees and accusations of illegal off takes.
The paper will provide an overview of the following issues related to cross country transit pipelines:
- Risk Exposure for Transit Pipelines
- Guidance for identification of a “Good” or ”Bad” Transit Country
- Measures to mitigate the Transit Risk and inspire good behavior of a transit country
- Lessons Learnt from the recent Gazprom – Ukraine Dispute
- Comparison of LNG and Pipeline in terms of Cost, Risk and Flexibility