Putin tells Borisov: South Stream will go on - with or without you

Romania’s recent declaration that it may participate in South Stream and Russian Prime Minister Vladimir Putin’s signing of a protocol with Turkey to start exploration work on Russia’s natural gas pipeline to Europe earlier in August is sending a clear message to Bulgaria that Putin may take them out of South Stream.

Since he assumed office in late July, the new Bulgarian Prime Minister Boyko Borisov has made it clear it was going to reconsider his country’s participation in South Stream and Burgas-Alexandroupolis. The former Sofia mayor and firefighter should have known better. You can’t bluff Putin.

“Putin saw that Bulgaria is trying to play with Russia and I think he will react in his typical style. For me, it will be not a sensation if Russia will change the route of South Stream,” energy consultant Konstantin Simonov, director of the independent National Energy Security Fund in Moscow, told New Europe telephonically on August 20.

“Essentially Moscow is saying to Bulgaria we can work around you,” Chris Weafer, chief strategist at Moscow’s Uralsib bank, said on August 21. “Russia has made it clear that it certainly feels it has alternatives and it has been exploring those alternatives with a formal agreement with Turkey and now quite likely with some deal or some exploratory talks with Romania. No question about it Russia is definitely telling the government of Bulgaria this project will go on with or with out you,” Weafer told New Europe telephonically.

Putin’s visit and gas offer to Ankara is also linked to the battle between South Stream and the EU-backed Nabucco. “It is all linked to the battle between the two pipelines. Which one becomes viable or starts first,” Weafer said.

“It’s a very interesting situation that in Brussels and in Moscow everybody is speaking that Nabucco and South Stream is not competing project,” Simonov said. “But we are seeing that there is a serious competition and if Nabucco is signing something so it seems that two-three weeks later South Stream will do the same thing and vice versa.”

Putin’s deal with Turkey on August 6 came on the heels of the Nabucco inter-governmental agreement signed in Ankara on July 13. “The battle between the backers of Nabucco and South Stream is very much behind Moscow’s moves with Turkey and Bulgaria’s new reluctance to South Stream,” Weafer said.

Sofia wants to make a greater commitment – under pressure perhaps from the EU – to Nabucco instead of South Stream. The competitive advantage South Stream has over Nabucco is that the latter doesn’t have a source of gas. Yet! “Until it gets that source of gas and locks that in, the window of opportunity for South Stream is still open. But no doubt about it Russia is making clear it wants to proceed with South Stream as quickly as possible,” Weafer said.

There is the sentiment in Moscow that the Bulgarians are deliberately dragging their feet to give preference to Nabucco. “There is a sense that they are been pressed by Brussels to favour Nabucco and to put an obstacle in the way of South Stream. That is why Russia has been very active with Turkey and now with Romania, trying to find alternatives and show Bulgaria it can do this project without it,” Weafer said.

Putting even more pressure on Sofia, during his visit to Ankara Putin agreed to join the proposed Samsun-Ceyhan pipeline to carry oil from the Black Sea to the Mediterranean, which is an alternative to the originally planned Burgas-Alexandroupolis oil pipeline from Bulgaria to Greece. Russia and Bulgaria “are playing a game of chicken to some extent,” Weafer said. But Putin is making it clear to Sofia that Bulgaria could lose both the South Stream gas transit and the Burgas-Alexandroupolis oil transit just the same.

Kostis Geropoulos

Source: New Europe, August 23, 2009