Europe still wants to go around South Stream
BP has presented its own pipeline route to transport gas from the Transcaucasia to Europe. This could be an alternative to the Nabucco pipeline, which has not yet approved in full and subsequently, will be a rival to the Russian South Stream. Notably, the South Stream project has completed its paper work and Russia’s state-run gas monopoly Gazprom will start construction work shortly. Meanwhile, none of the European gas pipeline projects has a guaranteed resource basis.
The European Union already has five gas pipeline projects that should supply gas bypassing Russia. Earlier, Nabucco, which should link gas fields in the Caspian Sea with Europe, was considered the favourite. It was worked out in 2002 but shortly afterwards, it was deadlocked. It has not been revived yet, says senior analyst at the BKS Finance Group for oil and gas, Andrei Polischuk.
“This project is facing several problems. One of them is how to fill it with gas and how to find a resource basis. The second is its growing cost. Earlier, the project was estimated at 8 billion U.S. dollars, but at present, it has grown up to 12-15 billions of U.S. dollars. Perhaps the partners of the project have insufficient money to implement it,” says Andrei Polischuk.
Understandably, Nabucco is a no-go project. At present, Europe has devised new tactics and offers several versions to choose one of them.
Meanwhile, experts insist that Europe has sufficient gas. The implementation of the Nord Stream and South Stream projects will meet the demands of gas in Europe in full. Europe’s persistence to build a gas pipeline bypassing Russia has nothing to do with energy issues, says Andrei Polischuk.
“All these projects have first and foremost a hidden political motive. By implementing them, Europe tries to lower its dependence on Russian gas. At the same time, the construction of the South Stream pipeline is also a political decision. At present, tension in Russian-Ukrainian relations is heightening. The two projects, Nord Stream and South Stream, are crucial for Gazprom not from the standpoint of additional revenue but from the diversification of supplies and reducing transit risks,” Andrei Polischuk said.
The South Stream gas pipeline, which will be laid on the Black Sea floor and will pass through Bulgaria, Serbia, Hungary and Slovakia, is the only real project in the region to this date. This will be the most reliable pipeline by taking into account the fact that it will be built by Gazprom and Russian gas will be supplied to Europe. The basic problem facing the European projects is how to find a resource basis.