/ world today news/ The new option for a sea gas pipeline with a capacity of 63 billion cubic meters, which will connect Russia and Turkey along the bottom of the Black Sea, will allow Moscow to refuse the services of Ukraine in the delivery of “blue fuel” for Turkey and Greece, and perhaps also for Bulgaria, says a commentary in the leading business publication Kommersant.
Russia cannot build the South Stream gas pipeline because of the opposition of the European Commission and the absence of permission from the Bulgarian government. For this reason, he is abandoning the project, Russian President Vladimir Putin said during his visit to Turkey. Thus, “Gazprom” abandoned one of its largest and most expensive projects in its history after 8 years of negotiations, preparatory works and endless disputes with the European Union. Instead, Gazprom will build a gas pipeline in Turkey with the same capacity that was planned for South Stream – 63 billion cubic meters. gas.
“If Europe doesn’t want to build it, it means it won’t be built,” concluded Vladimir Putin after the end of negotiations with Turkish President Recep Tayyip Erdogan. The Kremlin mastermind said Russia would redirect its energy flows to other regions of the world, including with the help of accelerated construction of liquefied natural gas terminals. He added that Bulgaria, which in the autumn, under the pressure of the EU and the USA, banned Gazprom from working on the project, will lose 400 million euros per year from gas transit. “If Bulgaria is deprived of the opportunity to behave as a sovereign state, then at least let it ask the EC for money for the missed benefits,” suggested Putin.
The decision of the Bulgarian government put Gazprom in a difficult situation, because all the preparatory work for the start of the construction of the gas pipeline along the bottom of the Black Sea had already been carried out, the pipes for the first section had been manufactured and partially delivered to Varna, where the special ship was already waiting for them. which was to be involved in naval construction. But more importantly, the expansion of Russia’s gas transportation system for South Stream was estimated to cost about 1 trillion rubles, of which Gazprom had already spent more than 400 billion. In addition, the company has invested almost 5 billion euros in contracts for the marine part of the project.
As a result, the Russian authorities decided to propose as an alternative the construction of a pipeline to Turkey – Gazprom’s second largest export market, whose consumption, unlike that in the EU, is growing. The president of the gas monopolist Alexey Miller said that 14 billion cubic meters. along the future new gas pipeline will be received from Turkey itself /in exchange for the gas that now passes through Ukraine/. Another 50 billion cubic meters. Gazprom hopes to supply to “the Greek-Turkish border, where a hub will be established”. Thus, according to Gazprom’s version, even with the new version, the gas pipeline will allow Russia to abandon the transit through Ukraine for the supply of “blue fuel” to Turkey, Greece and, perhaps, Bulgaria. As this year’s practice has shown, “Gazprom” can supply Slovakia, Austria and Hungary /after the construction of an interconnector/ at the expense of “Nord Stream” /passing along the bottom of the Baltic Sea from Russia to Germany/. But Serbia, a small country in the Western Balkans, and Italy, Gazprom’s third largest market, will continue to depend on the Ukrainian gas transmission network. And the refusal of its use was the main goal in the construction of “South Stream”.
Ukraine has always been an avowed enemy of South Stream, which could devalue its gas transmission network. The EU’s opposition to the project in recent months has largely been linked to Brussels’ desire to support Kiev.
Alexey Miller specified that the pipeline to Turkey will be a completely new project in which local investors will be able to participate. The marine part will start from the “Russkaya” Compressor Station / the starting point of “South Stream” and the long-running “Blue Stream” gas pipeline connecting Russia and Turkey along the bottom of the Black Sea/. “Gazprom” has not yet announced what the route will be.
Industry analysts say it is cheaper for Russia to abandon South Stream construction and build a gas pipeline parallel to Blue Stream and the rest of Turkey.
The question remains open with the current shareholders of the marine part of “South Stream” – ENI, “Electriques de France” and “Wintershall”, which own 50% minus 1 share in the project and have already made investments. The situation with the auctions that have already taken place is also not completely clear. In January 2014, the Russian pipeline companies already won 50% of the supplies for the first of the four sections of the gas pipeline /35% are for OMK, 15% – for the Severstal Izhora pipeline plant/ and in March – 60% of the supplies for the second section / 35% of the orders were won by OMK, 25% – by “Severstal”. The total value of the first tender was about 1 billion euros /including the supplies of the German Europipe/, the second – 800 million euros /40% was won by the Japanese consortium Marubeni-Itochu & Sumitomo/. “Severstal” only emphasized that they fulfilled all their commitments regarding deliveries within the framework of the first auction /about 100,000 tons/. OMK and SST did not comment.
The “South Stream” project from the very beginning was not oriented towards obtaining additional profits, therefore its rejection will be positively received by investors, said Konstantin Cherepanov from UBS. In the current situation, Russia should abandon the construction of such a large gas pipeline altogether, believes Valery Nesterov from “Sberbank Investment Research”. According to him, “Gazprom” has become a hostage to the lack of flexibility, refusing to make concessions to its customers, who in turn were “strongly politically involved”. The expert recalls that from the moment the project began, it was heavily criticized, as almost all the benefits went to Europe, and Russia only had to ensure reliable supplies. The new pipeline for Turkey has been discussed for a long time, Nesterov adds. But he believes that the demand for Russian gas in this country will not increase significantly: Turkey is trying to balance with supplies from various sources, including Azerbaijan, Iran and liquefied natural gas. The expert said that Russia, choosing the Turkish option, does not get rid of the transit risks: Ankara has proven to be a tough negotiator, has repeatedly changed its position and broken agreements.
Moscow / Russia
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