Comeback of South Stream?

August 29, 2015

grafik In my article Turkish, Greek And Tesla Streams Re-routing Energy Supply In Eastern Europe how new Turk(ish) Stream pipeline is re-routing the energy supply in whole Eastern Europe with Greek and Tesla [Balkan] Stream gas pipelines. South Stream, was cancelled last December (2014) after Bulgaria (influenced by the EU acting on behalf of the US) made it impossible to construct the pipeline through its territory. South Stream project was replaced with ‘Turkish Stream’, the Russian pipeline to Turkey’s Eastern Thrace region and from there with ‘Greek’, ‘Tesla’ (or ‘Balkan’) Streams intended to South Stream’s Serbian, Hungarian, and Austrian partners, but detouring through Greece and Macedonia to compensate for the exclusion of Bulgaria.

At the same time, several observers say that South Stream has a good chance of being revived. Since there’s been no official cancellation of the South Stream cooperation from Moscow, Bulgaria assumes that the project can still be saved. Speculation about a revival appears to have come from a source in Moscow. Russia needs the pipelines as a tool to assert political pressure. And Bulgaria could play a role in these plans. (Source: DW ).

European nations could buy gas from a terminal at the Greco-Turkish border, in what was interpreted as a vague hint that such purchases could either be LNG or possibly even the start of a brand new pipeline. Anyway with these plans Turk(ish) Stream and its follow-ups are according EU regulations. The obstacle of South Stream was the EU’s Third Energy Package (TEP). Under these rules, a single company cannot own the pipeline through which it also supplies gas.

Comeback of South Stream

Now though, according Deutsche Welle there’s a different tone between Moscow and Sofia. Earlier this week, Putin acknowledged that Bulgaria’s NATO membership is a done deal. “We have to respect the choice of the Bulgarian people and continue to work with Bulgaria, independently of all the difficult questions in connection with different projects, including South Stream,” he said. Putin added that Russia and Bulgaria have historically enjoyed close ties. In Bulgaria, his words have been taken as a “clear signal of reconciliation” and “a completely new tone in bilateral relations.”

According Natural Gas Europe Bulgarian Energy Minister Temenuzhka Petkova has announced new efforts to push forward with South Stream, recently telling local media the project still remains a major goal for the country. She also said that the country’s has never walked out of the South Stream project. Kiril Domuschiev, head of the Confederation of Employers and Industrialists in Bulgaria, noted that pipework for South Stream could also be used for Turkish Stream or any other project involving both Bulgaria and Gazprom. He added that no one would stop Bulgaria from doing business with Russia.

No other country lying on the proposed route of the pipeline from Russia to central Europe is better prepared than Bulgaria in technical and organizational terms to start the construction works immediately, said Bulgaria’s former Energy Minister Dragomir Stoynev who is deputy chairman of opposition Bulgarian Socialist Party (BSP).  Another big advantage for Bulgaria is the availability of an agreed funding mechanism for the project which doesn’t involve budget spending and only needs to be activated, Stoynev said in comments after Putin’s earlier statement that Moscow will work closely with Bulgaria on the implementation of joint projects including those in the energy sector such as the South Stream gas pipeline. (Source: Novinite.com )

Energy expert Professor Atanas Tasev said in an interview for FOCUS News Agency , that “Both countries [Bulgaria, Russia] seem to have the intention. It remains Brussels to come out with a stance on the matter. Perhaps we will witness favourable processes in resolving the conflict in Ukraine,” “Many steps should follow from now on,” he added and stressed that the first official reaction from the Bulgaria came from Energy Minister Temenuzhka Petkova, who said that our country is ready.

“A problem can be solved only in the environment where it was created. Since it was the Russian President who created the problem, it is he who can solve it,” Prof Tasev, who has worked as a financial analyst for a number of deals in the Bulgarian energy sector, believes. He maintains that the route previously designated for South Stream is not “a result of some sentiments for the Bulgarian-Soviet fellowship” but is the most economically and technically viable solution. At the same time the professor notes that it is highly unlikely that South Stream is “reborn” with all of the four lines. He foresees that one of the pipes, with a capacity of 15.75 billion cubic meters of gas, might reach Europe via Turkey, while the others could be “redirected” to Bulgaria. (Source and more at Novinite.com )

Nine months after Russia loudly announced that it repeals the South Stream project, the Bulgarian government continues to carry out activities on construction of the pipeline. In addition the joint Bulgarian-Russian company South Stream Bulgaria, which had to build the pipeline on Bulgarian territory, continues to exist and accumulate costs. (Source: Radio Bulgaria )
turkish-stream-south-stream-karte

Nonetheless Greece, FYROM, Serbia, and Hungary are on the verge of signing a joint memorandum of cooperation on Turkish Stream and its Balkan route. Serbian media have already named part of the route as the “Tesla Pipeline” in an obvious attempt to “nationalize” the section that will pass through Serbia. Insiders suggest the Greek, Serbian, and Hungarian foreign ministers will meet in Belgrade in September to announce an agreement that will see the exact route formalized. It should be noted the foreign ministers, not energy ministers, have taken the lead on this file. (Source: Natural Gas Europe ) Latest developments with Tesla Stream wouldn’t have been possible had Macedonia not beaten back the Color Revolution attempt that aimed to sabotage the entire thing. (More in Terrorism in Macedonia Wasn’t An Isolated Act! ).

Eastring?

For Eastern Europe there is also a project called Eastring will bring gas from Azerbaijan, Turkmenistan, Iraq, Cyprus and Russia and will provide reverse deliveries from the gas hubs in Western Europe. This is actually a step towards the creation of a vertical gas corridor which is particularly valuable to Bulgaria.

Eastring would connect infrastructure in Slovakia to Romania and Bulgaria. Slovakia has taken the lead on the project and even suggested connecting to Turk Stream. Bratislava wants to be part of Gazprom’s plans to diversify transit options away from Ukraine because Slovakia is the critical link between pipelines in Ukraine and central Europe. The Slovakian company Eustream’s gas pipeline, expected to deliver gas to countries in the Balkans, and Gazprom’s Turkish Stream will be complementary projects, Eustream’s international development and public affairs head told RIA Novosti [on Feb. 2015]. Eustream’s Eastring pipeline will run from Bulgaria to Romania and then, via Hungary or Ukraine, to Slovakia. Its planned capacity will be from 20 billion to 40 billion cubic meters per year and project partners are Eustream, Transgaz and Bulgartransgaz.

Wider picture

Aside from production, the transportation of crude oil, natural gas and petroleum products is of paramount concern for oil-producing nations. For energy consumers, transit routes are necessary lifelines. A huge amount of the world’s energy is transited through pipelines, across the Eurasian landmass in particular. Natural gas has limited and expensive transport options. As a result, natural gas pipelines are constantly used as tool of the political pressure and bargaining. One of the most notable battlefields is the European continent, where Russia has exerted its influence through an intricate network of pipelines.

There is a strategic cooperation in the energy sector between EU and Russia as Russia is still the primary supplier of the EU’s hydrocarbon resources, providing 42% of its imported gas and 33% of its imported oil (2013). In addition due global warming the EU want to increase the share of renewable resources and natural gas in their consumption patterns. Russia’s bad relations with the West and Ukraine have created the need to Russia to rearrange its energy policy. From the Russia’s point of view Turkey, as a regional power with its independent policies, e.g. when deciding not to partake in the Western sanctions against Russia due to the Ukraine Crisis, is a more reliable partner than other alternatives. Cooperation between these two regional powers on issues related to Caucasia and Central Asia would generate mutual benefits so indeed the Ukraine Crisis may have paved the way for a new form of cooperation in Russian-Turkish relations.

The Continent has also taken steps to build a regulatory environment conducive to the new energy market it envisions. The Third Energy Package has played a key role in coordinating the European energy market and eroding monopolistic tendencies plaguing the natural gas networks. Among other things, the package’s regulations prevent pipeline operators from supplying natural gas and prevent suppliers from operating the pipelines. These rules have blocked Gazprom from owning or heavily investing in any European pipelines, with a few notable exceptions, such as the Ostsee-Pipeline-Anbindungsleitung pipeline. Europe has applied equal scrutiny to deals involving non-Russian companies, including Azerbaijani national oil company SOCAR’s proposed purchase of Greek pipeline operator DESFA.

Interactive: Veins of Influence

Screen%20Shot%202015-08-13%20at%2010.03.21%20AM

Interactive: Veins of Influence is republished with permission of Stratfor.”

 

Turk Stream update

The Gapzrom-led Turk(ish) Stream pipeline project has stalled as negotiations between Russia and Turkey on gas pricing have broken down. On July 2015 the Russian Energy Ministry sent to Ankara two versions of an intergovernmental agreement on the Turkish Stream gas pipeline, proposing to construct either one or all four planned strings.

The technical director of South Stream Transport B.V. Andrey Fick has been appointed as general director of the company in charge of construction of the Russia-owned Turkish Stream gas pipeline, Russian energy giant Gazprom announced in its statement, April 2015.

Related to The Environmental Impact Assessment (EIA), the Project benefits from the data available from the extensive surveying and approved EIA, and Environmental and Social Impact Assessment (ESIA) in accordance with international financing standards, conducted for the South Stream Offshore Pipeline project. The EIA and permitting process for the Turkish portion of the offshore pipeline is divided into two parts. South Stream Transport is conducting an EIA for the portion of the pipeline from the border of the Turkish and Bulgarian Exclusive Economic Zone (EEZ) to the Turkish coastline, with a length of approximately 275 km. For the remainder of the offshore route, the EIA was already approved in 2014 in the context of the South Stream Offshore Project.

map_route_turkey

Bottom line

Gazprom has asserted several times that it will cut off gas transits through Ukraine by the end of the decade. The current alternative routes (Nord Stream + Belarus), however, only present a capacity of 86.5 bcm per year. To maintain the current level of Russia’s exports (119 bcm in 2014) at least 35 bcm of additional pipeline capacity would be needed.

Turk Stream as well South Stream, would enhance the Continent’s energy security because it would enable natural gas flows to Europe to continue uninterrupted in the event of a fallout between Ukraine and Russia. The pipeline project would also incentivize European Union-based companies to invest in infrastructure in Southeastern Europe, integrating countries such as Romania and Bulgaria, into the more mature natural gas markets in Central Europe. New infrastructure for Turk Stream could also eventually carry Iranian or Central Asian natural gas to Europe. Due political reasons USA and EU probably are not very pleased nor active with Turk Stream, they maybe are tolerating the project so long as Russia adheres to the Third Energy Package and finalized Energy Union Package rules restricting Russian control over the Turk Stream project.

turkishstream (2)

 


Oil Geopolitics: The South Stream Pipeline Has Been Replaced by “The Balkan Stream”

May 12, 2015

While South Stream Pipeline project was replaced with Turk Stream and planning is going on to continue project with sc Balkan Stream some serious threats still remain that could endanger the viability of this new Balkan Stream. These mostly have to deal a reoccurrence of instability in Macedonia. Recent events in Macedonia (FYROM) are giving some credibility to an article Oil Geopolitics: The South Stream Pipeline Has Been Replaced by “The Balkan Stream  by Andrew Korybko in Global Research, March 15, 2015. The article is republished here as it gives a background information and view to issue.

Oil Geopolitics: The South Stream Pipeline Has Been Replaced by “The Balkan Stream”.

As Russia begins to build a pipeline through Macedonia that could form the basis of a revised South Stream route, the Hungarian President is in talks with Erdogan over financing this enormous project. 

While many in the Balkans were lamenting the cancellation of the South Stream project last December, Russia was hard at work laying the foundation for its replacement, hereafter referred to as ‘Balkan Stream’. The concept is to connect ‘Turkish Stream’, the Russian pipeline to Turkey’s Eastern Thrace region, to South Stream’s previously intended Serbian, Hungarian, and Austrian partners, but detouring through Greece and Macedonia to compensate for the exclusion of Bulgaria. While such a strategy was previously only talk, concrete action was taken this week to transform it into a reality, which wouldn’t have been possible had Macedonia not beaten back the Color Revolution attempt that aimed to sabotage the entire thing.

Step By Step

The whole reason that Balkan Stream was conceived in the first place was because its predecessor, South Stream, was cancelled last December. Russia took this decision after Bulgaria (influenced by the EU acting on behalf of the US) made it impossible to construct the pipeline through its territory due to a slew of political and legal games that it was playing. At the time, the author was the first person to write that a replacement route could realistically go through Greece and Macedonia, thereby resurrecting the project and fulfilling the pressing energy demands in Europe that necessitated its creation in the first place. Russia was quick to move, and in the same breath that it cancelled South Stream, it announced ‘Turkish Stream’ to partially replace it. This pipeline will travel under the Black Sea just as South Stream was intended to, but would instead reach land at Turkey, not Bulgaria. From there, the Russian government said, European nations could buy gas from a terminal at the Greco-Turkish border, in what was interpreted as a vague hint that such purchases could either be LNG or possibly even the start of a brand new pipeline.

Midway through December, Putin officially suggested during his annual news conference that the Greek-Macedonian ‘detour’ could represent a solution to South Stream’s cancellation, provided that there was interest in his proposal. This was echoed by the Hungarian Foreign Minister in mid-January, when he said that his country would support the project. Interpreting this as a greenlight to move forward, Putin discussed the topic with Viktor Orban during the former’s visit to Budapest last month. This week was the most monumental in terms of actually making progress on the project because Stroitransgaz, one of the companies involved in the original South Stream, announced on Thursday that it would be building a gas pipeline through Macedonia, which is set to begin construction this weekend and be completed by next summer.  That same day, the Hungarian President, while on a four-day visit to Turkey, spoke with Erdogan about a financing plan for the project, and a day afterwards, the Macedonian Foreign Minister paid an official visit to Turkey as well, where it is expected that he’ll discuss the topic, too. Through these series of diplomatic steps, Balkan Stream made the jump from paper to practice.

Gas pipes

© AP PHOTO/ PETR DAVID JOSEK

Slovakia’s Eustream Ready to ‘Continue’ Russian-Turkish Pipeline to Europe

The Failed Color Revolution

This wasn’t supposed to happen, at least not if the US had gotten its way in Macedonia last month. Understanding that it’s the crucial bottleneck through which Balkan Stream must run, Washington wanted to stage a coup in the country in order to install a new leader that would reject the project and put an end to the region’s plans for reliable energy transit. Nikola Gruevski, the Prime Minister of Macedonia, had earlier broke ranks with his EU partners by refusing to sanction Russia, in a show of rebellion that the US felt it had to absolutely put down. For the few past couple of years, it had contracted the services of former intelligence chief Zoran Verushevsky in order to illegally wiretap over 20,000 people in the tiny country of 2 million, including politicians, journalists, and regular citizens. When it became clear at the end of last summer that South Stream was being stonewalled by Bulgaria and a new route would likely have to be streamlined (which geography dictates would obviously have to go through Macedonia), it activated its intelligence cell in order to preempt these plans, just in case they would go forward sometime in the future.

Zoran Zaev, the leader of the opposition, was given copies of these illegal tapes in order to blackmail the government, which he attempted to do from September to November. When Gruevski refused to give in to the blackmail, Zaev threatened to go public with the wiretaps and accuse the government of carrying them out, alleging that they also contained embarrassing political information and insinuating that this would lead to a Color Revolution. At the end of January, the Macedonian security services finally arrested Verushevky and a few other conspirators for plotting a coup, and Zaev had his passport taken to prevent him from fleeing while the investigation was ongoing. Verushevsky’s son even attempted to destroy his father’s computer before police stopped him, yet authorities were able to access the salvaged hard drive and recover Skype conversations where Verushevky and another plotter even spoke of starting a civil war in the country as a result of the blackmail ‘revelations’.

Sputnik.Polls Reveals Serbia and Bulgaria Fear Cancellation of South Stream

While Zaev attempted to create an actual Color Revolution last month by encouraging people to amass in the streets and protest the government, he failed to garner a consistent and sizeable following, showing that most Macedonians saw through the gimmick for what it was — a Ukrainian-styled soft coup attempt. Taking matters further, both Albanian parties in the country (whose affiliates are estimated to possibly constitute a quarter of the population) loudly distanced themselves from Zaev, thereby diminishing the prospects of a return to the 2001 interethnic violence that rocked the country and could have set the stage for the civil war that the conspirators previously discussed.  Russia evidently feels that the combination of government action, Albanian loyalty, and popular support has finally stabilized the situation, since it would not have gone forward with the pipeline’s construction through Macedonia had it thought that it could be endangered by the Color Revolution attempt. Accordingly, one can interpret this as Moscow’s recognition that Washington’s plot ultimately failed.

The Battles Ahead

Despite the obvious failure of Zaev’s destabilization, serious threats still remain that could endanger the viability of Balkan Stream. These mostly have to deal with the susceptibility of Hungary and Serbia to similar Color Revolution attempts (or a reoccurrence of instability in Macedonia), as well as the fragility of the Greek government. Also, a plan needs to be devised as to how the pipeline will comply with the EU’s Third Energy Package (which mandates the separation of energy suppliers and distributors), as the failure to have done so was the ‘official ‘reason that South Stream was stonewalled last year. If these difficulties can be surmounted, which is entirely feasible, then Balkan Stream has the potential to enrich the region and ensure Europe’s stable energy transit for decades to come.


Is South Stream Pipeline Transforming Itself To “Turk Stream”?

December 3, 2014

We believe that in the current conditions Russia cannot continue with the realisation of this project [South Stream].” (Vladimir Putin)

russia vs euRussia’s $40 billion South Stream gas pipeline project came to reach a standstill on Monday 1st Dec 2014 when, as the WSJ reports, Russian President Vladimir Putin said: “We couldn’t get necessary permissions from Bulgaria, so we cannot continue with the project. We can’t make all the investment just to be stopped at the Bulgarian border.

The main reasons for halting the South Stream are plunging energy prices, stalling European demand, interpretation of the European Commission that all bilateral agreements (IGAs) for the construction of South Stream are all in breach of EU law and mostly the political standoff between the European Union and Moscow over the crisis in Ukraine.

The announcement on scrapping South Stream came during a visit by Russian President Vladimir Putin and Gazprom chief executive, Alexei Miller, to Turkey, during which Putin proposed building it to Turkey instead, offering its gas at a discount.

South Stream

South Stream is a Russian sponsored natural gas pipeline. As planned, the pipeline would run under the Black Sea to Bulgaria, and continue through Serbia with two branches to Bosnia and Herzegovina and to Croatia. From Serbia the pipelines crosses Hungary and Slovenia before reaching Italy. Its planned capacity is 63 billion cubic metres per year (bcm/y).

The key partner for Russia’s Gazprom in the South Stream project is Italy’s largest energy company, ENI.

Russia signed intergovernmental agreements with:

  • Bulgaria – January 18, 2008;
  • Serbia – January 25, 2008;
  • Hungary – February 28, 2008;
  • Greece – April 29, 2008;
  • Slovenia – November 14, 2009;
  • Croatia – March 2, 2010;
  • Austria – April 24, 2010.

The construction of South Stream started on December 7, 2012 is scheduled to be completed by 2015. The offshore section of the pipeline, which will run in part along the seabed and reach the maximum depth of 2,200 m, will be 931 km long. Each of the four parallel strings of the pipeline will consist of 75,000 pipes, each 12 m long, 81 cm in diameter, 39 mm thick and weighing 9 tonnes.

South Stream and partners

South Stream and partners

Last December (2013), the European Commission said that all bilateral agreements (IGAs) for the construction of South Stream are all in breach of EU law and need to be renegotiated from scratch (Source: Euractiv ).

Field status” as solution

The European Commission threatened to launch legal action on grounds that South Stream violates EU anti-monopoly laws, with Bulgaria halting construction in August 2014. There are two main requirements for the eligibility of major new gas infrastructure projects like South Stream to be developed in the EU in compliance with the European Commission Directive 2009/73/EC concerning common rules for the internal market in natural gas. The first one relates to the unbundling between the suppliers and the owners of infrastructure, while the second one relates to the granting of third party access to the transmission and distribution systems. This is a formality – the real cause to block South Stream from EU side is of course political confrontation due Ukraine.

Bulgaria and Russia have been discussing the possibility of reclassifying the Bulgarian section of the South Stream gas pipeline into a field pipe to exempt it from EU restrictions. Indeed “the field status” could solve all the problems on restrictions related to the EU third energy package.

In the case of the South Stream Russia’s Gazprom cannot be engaged in production, transportation, and sales of natural gas at the same time. But the pipes carrying gas from EU’s sea shelf fields have a special field status, which exempts them from the restrictions of the legislation.Under EU legislation, pipelines carrying gas from the sea shelf wells of EU countries, particularly Germany, France and Belgium, have a ‘field pipeline’ status that exempts them from the requirement for mandatory granting of access of third parties to the pipeline.Austria’s OMV, Gazprom’s partner in the Austrian section of South Stream, produces gas on the Bulgarian Black Sea shelf, and a pipeline built by OMV to carry gas from the shelf can be later included in the project by reassignment of rights. (Source and more at Novinite: Bulgaria, Russia Discuss Exempting South Stream from EU Restrictions )

Consequences

The main loser of possible cancellation of South Stream project will be Bulgaria. The direct budget revenues that Bulgaria would have had from [gas] transit were at least €400 million a year. The share in the country’s €40 billion GDP to come from South Stream was expected to be 1.5 percent, according to Bulgarian Economic Ministry. Direct investment was supposed to be around €3 billion creating around 2,500 new jobs. The Northern parts of the country, through which the main pipeline route would be laid, were expected to have significantly improved social infrastructure and become more attractive to investment.

Besides Bulgaria also Serbia, Austria and Italy would have made big time revenue, and employed lots of people in need of jobs, by being links in the South Stream chain. Now they will have to pay the Turk Stream toll booth to secure their energy needs.

For Serbia it [South Stream] has been the cornerstone of our industrial strategy for the next 10 years so the situation is worrying us,” Vuk Jeremic, former foreign minister of Serbia, told New Europe on the sidelines of the Athens Forum 2014 on September 15. Right now the bets are off. But I’m hopeful that there will be progress in the future. But it would have to be part of a wider development of normalisation of relations between Russia and the West which currently does not seem to be in the making,” he said. Reminding that Gazprom is one of the biggest foreign investors in Serbia, Jeremic stressed that such a project would be of immense importance for his country’s economy so there are reasons for Belgrade to be worried.”

In addition with Turk Stream a reality, Ukraine has lost its strategic energy significance. The project operator South Stream Transport estimates that European companies will lose at least 2.5 billion euros because of the abandoned project. Japanese companies who were participating in the project will lose some 320 million euros – a Japanese consortium made up of Marubeni-Itochu and Sumitomo had received a pipe supply order worth that amount. (Source: Russia Beyond the Headlines )

If Gazprom decides to choose Turkey and Greece for the South Stream route, the pipeline project would largely resemble the TANAP-TAP project to bring Azeri gas to Italy through the territories of the same countries. The Trans-Anatolian gas pipeline (TANAP) is a proposed natural gas pipeline from Azerbaijan running through Turkey. The approximately 870 km long TAP pipeline connects with TANAP, and will cross Greece and Albania before reaching Italy through an offshore section. It is to be built by a consortium led by BP, Norway’s Statoil and Azerbaijan’s SOCAR. TAP is in an advanced stage of preparation and the start of its construction is planned in 2016.

Gazprom had spent 487.5 billion rubles ($9.4 billion) in the last three years on South Stream and upgrading the Russian pipelines that would have supplied it. Some of that work can be used for a separate link to Turkey. Supply contracts and intergovernmental agreements surrounding the project remain in force. The infrastructure built in preparation for South Stream will be used for “Turk Stream”.

“Turk Stream” instead?

Related to implementation of South Stream Russia agreed on 6th August 2009 with Turkey about energy cooperation with South Stream and also development of Blue Stream pipeline between Russia and Turkey under Black Sea so South Stream has secured also an alternative route. While EU started to create obstacles to project and in case Bulgaria continues to obstruct the construction of the South Stream pipeline this cooperation made base for Gazprom’s “Plan B”. Also on 24 May 2014 Russian President Vladimir Putin already hinted at another route for South Stream, during his meeting with leaders of world media.

Ankara would allow South Stream to reach Turkey under the Black Sea instead of Bulgaria, as originally planned. Russia would prefer not to opt for a plan B, but if the Commission doesn’t stop pressuring Bulgaria to freeze the construction of the pipeline, this alternative appears to be a viable option.

While announcing about South Stream hold off the Russian leader said he will add an extra branch to his existing Blue Stream gas pipeline to Turkey and build a new storage and trading “hub” on the Turkish-Greek border. The pipeline will have an annual capacity of 63 billion cubic meters. A total of 14 bcm will be delivered to Turkey, which is Gazprom’s second biggest customer in the region after Germany. The rest can be shipped through Turkey’s pipeline network to the Balkans.

On the left, the planned South Stream route, to the right, the Blue Stream pipeline to Turkey. Image from www.gazprom.com

On the left, the planned South Stream route, to the right, the Blue Stream pipeline to Turkey. Image from http://www.gazprom.com

Russia’s energy minister Aleksandr Novak said that the new project will include a specially-constructed hub on the Turkish-Greek border for customers in southern Europe. Novak later confirmed that Vladimir Putin personally ordered for the South Stream project to be mothballed, and its existing facilities to be repurposed for the new Turkish pipeline. (Source: RT )

The clear winner of new plans is Turkey – the in-between partner and energy hub – who will take gas from Iran and Russia to Europe. In addition Russia and Turkey also noted that plans for Russian firm Rosatom to build a $20 billion nuclear power plant in Turkey are proceeding full speed ahead.

The bottom line

South Stream exposed cracks in EU strategy as Hungary, Austria, Serbia and Bulgaria among others saw it as a solution to the risk of supply disruptions via Ukraine, which have occurred three times during the last decade. Brussels, on the other hand, saw it as entrenching Moscow’s energy stranglehold on Europe. It remains to see whether Russia’s decision was final or a political ploy – a tactical step – to gain more favorable terms.

From my point of view the original South Stream is the better alternative than “Turk Stream” as it is the direct option to EU/Europe and avoid a transit risk related to Ukraine or Turkey so in my opinion the best follow-up would be attempt to solve Russia-EU differences and run pipeline directly to Europe as initially planned.

P.S:

Turkey, the country that bridges Europe with Asia is merely the latest expansion of Putin’s anti-dollar alliance as Turkey and Russia agree to use local currencies in trade. Wider perspective about this issue can be read from my article ¥uan and Waterloo of Petro$

Update 05/12/2014:

The South Stream pipeline crossing southeastern Europe could still be completed, despite the stated intention of President Vladimir V. Putin of Russia to abandon the project, according to Jean-Claude Juncker, president of the European Commission.  The comments by Mr. Juncker, at a news conference here on Thursday, indicated that the bloc was intent on keeping at least the idea of the South Stream project alive — despite the European Union’s sanctions against Russia over the crisis in Ukraine, and despite the Europeans’ longstanding skepticism about a pipeline that could extend the region’s heavy reliance on Russian energy.

“South Stream can be built,” Mr. Juncker said. But, he added, “the ball is in the court of Russia.” Mr. Juncker’s comments — as surprising in some respects as Mr. Putin’s sudden decision to reroute the pipeline — were the latest twist in a project that has became a geopolitical tug of war between Brussels and Moscow. (Source: NYT )

pipelines From Russia to EU