Pipeline Project Putin Puts Europe In A Vice
"Projects like South Stream are in the long-term national interests of Russia and those of our European partners," wrote Russian president Vladimir Putin in an article published on the occasion of his two-day visit to the Bulgarian capital city, Sofia. It was a swipe at the EU that Putin simply couldn't resist. And it hit home. Many in the EU are, after all, trying to reduce theirm dependence on Russian gas.
Putin has again thrown a wrench in the system. In Sofia on Friday and Saturday, he secured Bulgarian agreement for a new pipeline to cross the country on its way further into Europe. The project is called South Stream, and it's in direct competition with the EU joint project known as Nabucco. The pipeline named after a Giuseppe Verdi's opera connects Europe directly to the sources of gas in the Caspian Sea and in Central Asia -- and the idea was to circumvent Russia altogether.
Europeans, though, have had problems realizing their $5 billion project. So far, Nabucco exists only on paper. And it's still unclear where the gas for the pipeline would come from. There is an agreement with Azerbaijan, but experts doubt that sources there are sufficient to supply the massive project.
Other Central Asian countries rich in natural-gas, like Turkmenistan, have been traditionally within the sphere of Russian influence. Iran could jump in with its gas reserves to fill the gap, but cooperation with the Mullah's regime has run into political obstacles.
'The Russians Have A Plan and Plenty of Money'
Russia, on the other hand, has gone all out: In June of last year, Gazprom and the Italian conzern Eni signed a contract for the construction of a 900-kilometer pipeline that would go under the Black Sea from Russia to Bulgaria. But that's not all. The next step of the project stipulates that South Stream should continue its way through Italy, Austria and Hungary.
"I think Russia will succeed in securely anchoring South Stream in the European Union," says Alexander Rahr, an expert at the German Council on Foreign Relations (DGAP). "We're dealing with a type of energy foreign policy here and the West has been dozing. But the Russians have a plan and they have the gas and plenty of money," he says.
The competition between Nabucco and South Stream is a race against time -- and the Russians are a step ahead. If South Stream is built, it will deliver about 30 billion cubic meters of Russian gas to Europe.
Putin is also pushing for the project to move forward because with it he can circumvent traditional transit countries like Ukraine, Poland and Belarus. "The Ukrainian corridor is not secure," says Victor Gavrilov of Russia's Gubkin Academy of Oil and Gas. The conflict with Ukraine in early 2006 underscored that. At the time, Russia suspended gas deliveries to Ukraine because the countries could not agree on a higher natural gas price. Kiev responded by tapping into Russian transit pipes crossing its territory, illegally siphoning off gas intended for Western Europe. "But our customers in the West blamed us," Gavrilov says, explaining the official Russian view.
On Europe's northern flank, Russia is also pushing full-steam ahead to build a new pipeline. North Stream is to connect Russia directly with Germany, a country that covers 40 percent of its gas needs with Russian imports. Both projects will enable Gazprom to take an even tighter hold on Europe.
Looking at the growing demand for natural gas in Europe, Rahr says, "I think that both pipelines can, and actually need, to coexist." If South Stream is built, it wouldn't necessarily spell the inevitable doom of Nabucco.
But it would lead to the failure of efforts to make Europe less dependent on Russian gas.