Energy security: South Stream vs. Nabucco gas pipelines

14/02/2008

Southeast Europe is becoming a staging ground for competition between rival energy projects.

By Valentina Pop for Southeast European Times in Bucharest -- 14/02/08

photo

Bulgaria joined the South Stream project during Russian President Vladimir Putin’s (left) visit to Sofia. [Getty Images]

In its drive to reduce natural gas dependency on Russia, the EU is trying to move the Nabucco gas pipeline project forward. The pipeline is also backed by the United States and would transport 30 billion cubic metres of gas from Azerbaijan via Turkey, Bulgaria, Romania, Hungary and Austria.

Quarrels over partners, gas suppliers and counter-offers made by Russia, which secured a deal with Nabucco partner Bulgaria on a rival pipeline called South Stream, have so far delayed progress on the EU/US project.

Bulgaria joined state-owned gas monopoly Gazprom's South Stream on January 18th, during President Vladimir Putin's visit to Sofia. Putin, who negotiates on behalf of Gazprom, has also secured a deal with Serbia by promising that a northern branch of South Stream would run through the country.

In return, Serbian authorities agreed to sell the state-owned oil company NIS to Gazprom, without the public tender sought by the EU. According to B92 radio, a Russian delegation will meet with the Serbian government by the end of this week to finalise details.

Hungary has also flirted with joining South Stream, though it has yet to sign any agreements. However, Prime Minister Ferenc Gyurcsany indicated last year that Nabucco "has been an old dream and an old plan".

Russia's efforts to expand its presence in the region have stirred controversy. Former Bulgarian Prime Minister Ivan Kostov, for instance, said in an interview for the Focus news agency that "Russia is interested in keeping the Balkans unsafe. That's how it applies its strategies there."

"Russia is blackmailing everyone with Kosovo, posing threats to fan the frozen fire in places like Abkhazia and Transnistria. It is obvious that our insecurity is nurturing them," he said.

Many experts doubt that South Stream is a viable project, since it would cost at least twice as much as Nabucco and would simply divert some gas exported through Ukraine, instead of providing a new source of gas. "It is a political pipeline designed to counter Nabucco," says Alan Riley from London's City University.

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There are signs, however, that Moscow is ready to work out a deal with the EU. Gazprom director Sergey Kuprianov said on Monday that Russia would be willing to join Nabucco.

Reinhard Mitschek, head of the Nabucco consortium, says it would welcome Russian gas from the existing Blue Stream pipeline that connects Russia to Turkey.

Despite past setbacks, the project appears to be gaining momentum. A sixth partner, the German company RWE, joined Nabucco on February 5th. Gaz de France is also interested, but has been so far blocked by Turkey, for political reasons.

The EU co-ordinator for the project, former Dutch Foreign Minister Jozias van Aartsen, was in Ankara on Thursday (February 14th) to ease differences with Turkey, who is also backing Iran as a supplier for Nabucco.

This content was commissioned for SETimes.com.
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