decision to cease the Odessa field operations: an analyst at the Russian National
Energy Security Fund noted that ‘[a]t this point, Moscow is acting to relieve
tension,’
218 and the Director of Programs at the Russian International Affairs
Council—a State-affiliated think tank
219
—stated: ‘It is in Russia’s interests. . . to
achieve certainty [with regard to Crimea]’.
220 Russia’s recent conduct, therefore,
may be driven by political rather than legal concerns: continuing to provoke Ukraine
increases undesirable instability in the region, and ceasing operations reduces the
scope of complaint.
Second, economic concerns also inform this analysis: continued operations in the
Odessa field are increasingly financially infeasible and unnecessary, as
Chernomorneftegaz’s financial position weakens. The annexation has resulted in
international sanctions on Crimea, including by the United States.
221 These have
directly impacted Chernomoreftegaz’s operations: without access to deep-sea gas
production equipment, the Odessa field’s gas production decreased 6.7% between
2014 and 2015,
222 and the Crimean Minister of Fuel and Energy noted in December
2017 that the remedy—drilling new wells—was prohibitively expensive.
223 Thus,
Russia may have already had an economic incentive to find alternative means of
supplying gas to Crimea.
One alternative means of supply is the Kuban-Crimea gas pipeline. This pipeline
was completed in December 2016, linking mainland Russia to the Crimean Peninsula across the Kerch Strait: with capacity to transport 2.1 to 4 billion cubic metres of
natural gas to Crimea annually, this could potentially supply Crimea’s total annual
gas needs.
224 Crimea began receiving gas through this pipeline in 2017,
225 and in
January 2018, Chernomorneftegaz signed a contract with the Russian Ministry of
Energy to receive a further 1.76 billion cubic meters.
226 This suggests that
rigs of Chornomornaftogaz seized by Russia’, Interfax-Ukraine (online), 7 February 2017: https://
en.interfax.com.ua/news/economic/401625.html.
218 ‘Krym nachnet otkazyvat'sja ot sobstvennogo gaza’, supra note 195.
219 Russian International Affairs Council, ‘O sovete’ (2018): http://russiancouncil.ru/about/.
220 Tkachev, Fadeeva and Podobedova, ‘Mezhdu Krymom i Odessoj’, supra note 192.
221 See, e.g., Blocking Property of Certain Persons and Prohibiting Certain Transactions With
Respect to the Crimea Region of Ukraine (United States of America), Executive Order 13685,
Federal Register 79 No 247, 19 December 2014, Section 1.
222 See Republic of Crimea, No. 352-ZRK/2017: Attachment to Law of the Republic of Crimea of
January 9 2017: https://minek.rk.gov.ru/file/File/minek/2017/strategy/strategy-fullvers.pdf.
223 ‘Ob’jom dobychi gaza v Krymu snizhaetsja,’ supra note 191.
224 President of Russia, Press Release of 27 December 2016: http://kremlin.ru/events/president/
news/53601.
225 ‘Media: Crimea began receiving gas from Russia’s Krasnodar Krai’, UAWire (online), 9 January
2017: http://uawire.org/news/media-crimea-began-receiving-gas-from-russia-s-federal-subject-kras
nodar-krai.
226 ‘Chernomorneftegaz do fevralja 2019g kupit u struktury Minjenergo RF 1,8 mlrd kub. m gaza na
11 mlrd rub’ Interfax-Russia (online), 17 January 2018: http://www.interfax-russia.ru/Crimea/
news.asp?id¼901328.
314
G. Kynaston and R. Brown
Energy Security Fund noted that ‘[a]t this point, Moscow is acting to relieve
tension,’
218 and the Director of Programs at the Russian International Affairs
Council—a State-affiliated think tank
219
—stated: ‘It is in Russia’s interests. . . to
achieve certainty [with regard to Crimea]’.
220 Russia’s recent conduct, therefore,
may be driven by political rather than legal concerns: continuing to provoke Ukraine
increases undesirable instability in the region, and ceasing operations reduces the
scope of complaint.
Second, economic concerns also inform this analysis: continued operations in the
Odessa field are increasingly financially infeasible and unnecessary, as
Chernomorneftegaz’s financial position weakens. The annexation has resulted in
international sanctions on Crimea, including by the United States.
221 These have
directly impacted Chernomoreftegaz’s operations: without access to deep-sea gas
production equipment, the Odessa field’s gas production decreased 6.7% between
2014 and 2015,
222 and the Crimean Minister of Fuel and Energy noted in December
2017 that the remedy—drilling new wells—was prohibitively expensive.
223 Thus,
Russia may have already had an economic incentive to find alternative means of
supplying gas to Crimea.
One alternative means of supply is the Kuban-Crimea gas pipeline. This pipeline
was completed in December 2016, linking mainland Russia to the Crimean Peninsula across the Kerch Strait: with capacity to transport 2.1 to 4 billion cubic metres of
natural gas to Crimea annually, this could potentially supply Crimea’s total annual
gas needs.
224 Crimea began receiving gas through this pipeline in 2017,
225 and in
January 2018, Chernomorneftegaz signed a contract with the Russian Ministry of
Energy to receive a further 1.76 billion cubic meters.
226 This suggests that
rigs of Chornomornaftogaz seized by Russia’, Interfax-Ukraine (online), 7 February 2017: https://
en.interfax.com.ua/news/economic/401625.html.
218 ‘Krym nachnet otkazyvat'sja ot sobstvennogo gaza’, supra note 195.
219 Russian International Affairs Council, ‘O sovete’ (2018): http://russiancouncil.ru/about/.
220 Tkachev, Fadeeva and Podobedova, ‘Mezhdu Krymom i Odessoj’, supra note 192.
221 See, e.g., Blocking Property of Certain Persons and Prohibiting Certain Transactions With
Respect to the Crimea Region of Ukraine (United States of America), Executive Order 13685,
Federal Register 79 No 247, 19 December 2014, Section 1.
222 See Republic of Crimea, No. 352-ZRK/2017: Attachment to Law of the Republic of Crimea of
January 9 2017: https://minek.rk.gov.ru/file/File/minek/2017/strategy/strategy-fullvers.pdf.
223 ‘Ob’jom dobychi gaza v Krymu snizhaetsja,’ supra note 191.
224 President of Russia, Press Release of 27 December 2016: http://kremlin.ru/events/president/
news/53601.
225 ‘Media: Crimea began receiving gas from Russia’s Krasnodar Krai’, UAWire (online), 9 January
2017: http://uawire.org/news/media-crimea-began-receiving-gas-from-russia-s-federal-subject-kras
nodar-krai.
226 ‘Chernomorneftegaz do fevralja 2019g kupit u struktury Minjenergo RF 1,8 mlrd kub. m gaza na
11 mlrd rub’ Interfax-Russia (online), 17 January 2018: http://www.interfax-russia.ru/Crimea/
news.asp?id¼901328.
314
G. Kynaston and R. Brown