/ world today news/ After a short lull, the gas disputes between Russia, the European Union and Ukraine came back on the scene. This time, Bulgaria has slowed down any work on the South Stream gas pipeline, says an extensive commentary in the Argumenti i Fakti newspaper.
The relevant document was signed by the Bulgarian Minister of Economy and Energy, Vasil Shtonov. Termination of the project, including the holding of tenders and the signing of any contracts, will be postponed until the gas pipeline is brought into compliance with the requirements of European legislation, Stonov said.
Why did the EU corner the implementation of the project, which is the only guarantor.
The blocked stream
The claims of the European Commission to “South Stream” are that it does not comply with the requirements of the Third Energy Package, according to which the same company /in this case it is “Gazprom”/ has no right to carry out the transportation of gas and together with this the supply of blue fuel. Simply put, European legislation provides for the separation of gas suppliers with transport and distribution companies.
The Bulgarian section of “South Stream” is the first overland section and is considered the most technologically complex. The main route from the Bulgarian part of the pipeline should go from the Black Sea coast to the border with Serbia with a detour to the compressor station in Provadia, from where there will be a transfer of fuel to the country’s gas transmission system, as well as to those of Greece, Macedonia and Turkey.
As the European Commissioner for Energy Gunter Oettinger previously said, the European Commission has questions regarding the agreement between Sofia and Moscow, related to ecology, anti-monopoly legislation and internal market rules. The construction of “South Stream” in Bulgaria is carried out by the joint company South Stream Bulgaria AD, which was established on a parity basis between “Gazprom” and Bulgarian Energy Holding /BEH/. “We believe that Bulgaria does not comply with the legislation in the field of public procurement. The main concern in our country is the fact that the joint venture “South Stream Bulgaria” received a contract for the design, financing, construction and use of the gas pipeline without a transparent and competitive procedure, which is necessary in such cases,” the press secretary of the European Commissioner for Competition, Antoine Colombani, said earlier.
Even then, the EC warned that it was necessary to stop all work on “South Stream”. According to her, the EC is not giving up on “South Stream”, but only wants the project to comply with European legislation. According to the assessment of one of the directors of the analytical department “Investcafe” Grigoriy Birg: “The decision of the EU to hinder the South Stream project is determined by political, not economic considerations and brings with it an increase in the risk of a collapse of gas supplies in the region in future”.
After that, the Prime Minister of Bulgaria, Plamen Oresharski, also expressed support for the freezing of the gas pipeline project under the pressure of European officials. After him, the Minister of Transport and Infrastructure of Serbia, Zorana Mihajlovic, also expressed the suspension of work on “South Stream”. By the way, she is a staunch opponent of Bulgaria’s participation in the gas pipeline.
“The decision of the EU to impede the South Stream project, in my opinion, is motivated by political, not economic considerations, and entails an increase in the risk of a collapse of the gas supply in the region in the future. This is directly evidenced by the decision of Ukraine theoretically to allow the introduction of the ban on the transit of Russian gas through the territory of the country,” warned Birg.
Ukrainian trace
In accordance with the initial plans, the first gas deliveries to the countries of Southern and Central Europe via the gas pipeline will begin in 2015, and in 2018 the site will reach its design capacity of 63 billion cubic meters. per year. This will reduce Ukraine’s role in the transit of gas to the EU to zero.
Today, Kiev is an important element in Moscow’s energy dialogue with Brussels, which is why it is obliged to honor the commitments it made, i.e. to ensure the transit of fuel. After all, European consumers of Russian fuel have more than once felt the unreliability of Ukraine as a transit country. In connection with the crisis that arose in relations between Moscow and Kiev and the unstable situation in Ukraine, experts do not rule out violations in the supply of Russian gas to the EU.
“In reality, South Stream can reduce risks and diversify the means of transportation. First of all, the implementation of the project will exclude a third country, i.e. Ukraine, and will allow direct regulation of cooperation between Moscow and the countries of the European Union. In addition, the gas pipeline will solved the problem of supplying fuel to Southern Europe. If Northern Europe can import energy resources from Norway or the North Sea, Spain and Portugal – from Mozambique, then Bulgaria and Serbia, through which the South Stream gas pipeline will pass, have no alternative to Gazprom “and they pay some of the highest tariffs in Europe. The demand from the entire EU guarantees the implementation of the largest project in the field of energy”, assesses the vice-president of the Russian public organization “Russian Union of Engineers” Ivan Andrievsky.
The freezing of the work on “South Stream” by Bulgaria followed immediately after the adoption by the Verkhovna Rada of Ukraine of an amendment to the law on reforming the management of the Ukrainian gas transmission system /GPS/. The law, passed by the parliament, allows foreign, namely European and American companies, to lease and operate main gas pipelines and underground gas storage facilities in Ukraine. In other words, the GPS will not be managed by the government, but by the operating companies, to whom 49% of the shares will be sold, and the controlling project of 51% will remain in the hands of the government. Management companies must be established by January 1, 2015.
“There are no funds in the Ukrainian budget for the modernization of the GPS, which is why it is necessary to look for countries interested in the efficient operation of the GPS, Andrievsky believes.
Yatsenyuk does not hide his goal
“In practice, the gas reform bill is mainly aimed at attracting investors to modernize the system. There is no doubt that the EU countries need continuous supplies of Russian gas, and without losses of the transported fuel. Although the US does not import energy carriers through transportation through the territory of Ukraine, they are no less interested in transit. In parallel with the promotion of its own gas in the world, Washington seeks to reduce the influence of Russia on the energy market in Europe. That is why only some operators of Ukrainian gas can become EU and US companies that have the relevant certificates,” Andrievsky explains to “Arguments and Facts”.
Prime Minister Arseniy Yatsenyuk, the author of the bill on the creation of a single operator of the Ukrainian GPS, does not hide that such a decision can stop the construction of “South Stream”. “This gives us the opportunity to have new conditions for the transportation of Russian natural gas. It creates an opportunity to stop the construction of “South Stream” and to direct through Ukraine the entire amount planned to pass through “South Stream”, of which in the first place the EU countries are interested,” says Yatsenyuk.
According to experts, the creation of an operator of the Ukrainian highways with the participation of foreign, including European shareholders, may prevent the implementation of “South Stream”. “It may lead to the fact that Gazprom’s claim that the construction of the gas pipeline is necessary to reduce the risk of a breakdown in the supply of gas through transit countries will be less justified. At the same time, it is unacceptable to discuss this issue decides without the involvement of Russia, which supplies gas for the pipeline. The profitability of potential investments in the Ukrainian GNS will depend on this,” says Birg.
The implementation of the gas pipeline within the stipulated time may in practice discredit the holding of the events on the Maidan, which is absolutely unacceptable for the sponsors of the coup in Russia.
Experts are convinced that the problems with the construction of “South Stream” and with the launch of full power of “Nord Stream” increase the importance of Ukraine’s GPS for Europe’s energy security. Information appeared in the media that three foreign companies, including the American Chevron, are interested in the Ukrainian GPS. According to an ITAR-TASS source of information, after the law on reforming the management of the GPS of Ukraine comes into force, Western companies will apply for access to the management of the GPS. As another source of the agency said, “unofficially, the three companies that submitted their proposals have already agreed to this.”
For its part, “Naftogaz” plans in the near future to “start official negotiations with the operators of the gas transmission network for their participation in the management of the Ukrainian public transport network”. “Definitely, the Ukrainian GPS is of great interest to the West, as this system gives priority to possible geopolitical pressure on Russia. Currently, Russian diplomats together with Gazprom are taking all possible steps to remove any obstacles from the path of construction of South Stream ” “, reflects Artyom Deev, head of analytical management of FC Aforex.
On the one hand, the arrival of European and American companies to manage the Ukrainian public transport system has a political motivation to work against Gazprom and, in general, reduce the influence of Russia. But, on the other hand, on the eve of the heating season, EU countries want to ensure a warm winter through regular fuel supplies. So until Ukraine loses its status as a transit country, the situation in and around Ukraine should be watched very carefully. In fact, GPS as an investment target is not interesting for foreigners, but they are forced to take care of the state of the transport infrastructure themselves,” adds the economist.
Moscow / Russia
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