Signing the Agreement On South Stream, Nabucco Killer, and An opportunity that can’t be missed...
[The signing of the South Stream documents may prove to be the death certificate on the Ukrainian gas system, as well as the NABUCCO system....]
A shareholders’ agreement on the offshore part of the South Stream pipeline has been signed at the investment forum in Sochi, with the major project parties – Russia, Italy, France and Germany – moving into a new phase of its implementation.
Charged with building this part of the pipeline will be the South Stream Transport company to be established on the basis of the document. The string will originate in the Russian port of Novorossiysk to run across the Black seabed to Varna, Bulgaria, where the network will be divided into two systems. Its northern line is designed to reach Austria via Serbia, Hungary and Slovenia, while the southern one has Italy as its final destination. Branches are also planned to be built in Croatia, Macedonia, Greece and Turkey. Alongside the Nord Stream pipeline laid across the Baltic Sea, this project will cover all of Europe’s energy requirements. This, in its turn, will straight away take the issue of so-called gas wars with Ukraine off the agenda, according to General Director of the National Energy Institute Sergei Pravosudov.
“Taken together, South Stream’s planned capacity of 63 billion cubic meters per year plus the 55 billion of the Nord Stream will shut down the Ukrainian gas transit corridor. Kiev’s gas transport system may be safely sold for scrap after the South Stream is launched in 2015,” Sergei Pravosudov believes.
Official Kiev seems to be already considering such an option. The day before, that country’s Prime Minister Nikolay Azarov said the government was dissatisfied with the way Europe and Russia used its gas transport system and is ready to consider its temporary shutdown. Earlier, President Viktor Yanukovich suggested that Moscow waive the project of South Stream’s offshore part and lay a pipe via Ukrainian territory. All these are signs of panic, says expert Andrei Meshcherin.
“This is a plainly provocative political statement. All specialists are perfectly aware that the South Stream is, among other things, aimed to supply Russian gas bypassing Ukraine. What is the good of it if we once again start pumping fuel via its territories?”
However, the European Commission has apparently not yet realized the benefit, with its energy chief Günther Oettinger repeatedly stating that the South Stream impedes the implementation of Europe’s Nabucco and Trans-Caspian projects. Brussels is also threatening to leave the South Stream out of the list of exceptions to EU’s Third Energy Package, which bans a country from selling gas while simultaneously owning a pipe. There is a need to protect strategic projects like the South Stream from such challenges, stresses director of Institute for Energy and Finance Vladimir Feigin.
“This pipeline will increase the flexibility and security of gas supplies. Europe will be provided with attractive terms if it comes to realize this finally. No one has so far managed to build powerful systems under the Third Energy Package. Even investors from the second one, who saw those terms as inappropriate, demanded exceptions for themselves. In other words, Europe has to decide whether it is going to speculate or wants higher supplies,” Vladimir Feigin says.
The document signed in Sochi also outlines partnership interests of international participants. Italy’s ENI, Germany’s Wintershall (a wholly-owned BASF subsidiary) and France’s EdF (Électricité de France) will hold an overall 50 percent, with Gasprom having the rest. South Stream’s Chief Executive Officer Marcel Kramer of Holland said that the project is based on both strategic importance and commercial benefits that cannot be missed....