Putin launches South Stream, squeezes Ukraine

On 7 December, Russian President Vladimir Putin personally attended the symbolic first welding of the South Stream gas pipeline in the coastal town of Anapa.

"South Stream will create the conditions for a reliable gas supply for the main consumers in southern Europe," Putin said.

He also tried to put environmentalists’ minds at ease. "This project, the same as Nord Stream, will conform to the most advanced standards. We have thoroughly studied the Black Sea area through which the pipeline will be laid. I can assure all the participants in the project that it will meet the highest environmental standards," Putin said.

South Stream, bypassing Ukraine, will stretch over 2400km, traversing the Black Sea and will carry Russian gas via Serbia, Hungary and Slovenia to Northern Italy.

South Stream is seen as competition to the EU-backed Nabucco pipeline, which is supposed to pump gas from Central Asia to Europe via Turkey and southern Europe, reducing Europe’s reliance on Russian gas.

In Anapa, apart from Putin, among those present at the ceremony were Bulgaria’s Regional Development and Public Works Minister Liliyana Pavlova as well as representatives of Italy's ENI, France's EDF and Germany's BASF.

EU Energy Commissioner Günther Oettinger declined the invitation to attend the groundbreaking ceremony for South Stream. “Energy Commissioner Oettinger was invited but had to decline due to a planned business trip abroad the same day,” a Commission spokeswoman told New Europe from Brussels on 7 December. “Our Delegation in Moscow attended and represented the Commission.”

A day earlier, Konstantin Simonov, head of Russia's National Energy Security Fund (NESF), told New Europe by phone from Anapa on Russia's Black Sea coast where he was scheduled to attend the groundbreaking ceremony for South Stream that the pipeline is competing not with Nabucco but with Ukraine. “I’m absolutely sure that Ukraine was the main accelerator of South Stream,” Simonov said.

Gazprom conceived South Stream after a pricing dispute with Ukraine in 2007. After an even harsher dispute with Ukraine in 2009, which disrupted gas supplies to Europe, Putin decided to accelerate South Stream. “South Stream is against Ukraine,” Simonov said. “Nabucco has no success so it’s not a real threat for Gazprom. The main problem now is what will be the situation with Ukraine because if there will be no progress in our negotiations with Ukraine, we will build four pipes – because South Stream is four pipes,” he said.

Ukraine still is the main transit country for Russian gas supplies to Europe. “If there will be some progress with Ukraine and Ukraine will be ready to give the pipeline system to Gazprom, there will be no necessity to build four pipes with capacity of 63bn cubic metres. That is why tomorrow (7 December) we will start construction of first pipe. But it’s still a question: Will there be one pipe or four pipes? That is why it’s very difficult to speak what will be the route of pipeline in Europe,” Simonov said.

Russian energy monopoly Gazprom owns half the shares in the South Stream Transport consortium that runs the operation. The other half is split between Italy’s ENI, France’s EDF and German BASF subsidiary Wintershall. The pipeline will be able to transport 63bn cubic metres of gas per year. Construction is to be completed by 2015 and it will cost a minimum of €16bn.

By Kostis Geropoulos

NE, December 6, 2012