MOSCOW, December 12 (Sputnik) — After Russia’s leader Vladimir Putin cancelled the controversial ‘South Stream’ natural gas pipeline, the nations of Southern Europe are facing increased risks to their businesses, who contracted to participate in the project’s realization, as well as overall economic frustration, as the pipe, if constructed, would have brought plentiful gas transit money into the region’s emerging markets. The recent developments have sparked a discussion about possible compensation payments from Russia for its sudden unilateral decision.
The South Stream pipeline would link Russia through Bulgaria and Serbia to Hungary and Austria and many local construction firms were planning to participate in the infrastructure development, thus boosting their revenues.
In particular, in Serbia, the Gazprom subsidiary, Tsentrgaz, won a contract to build the Serbian part of the pipe on 8 July. The contract provided multiple job opportunities for Serbian construction workers, mechanics, welders, engineers and other related staff. Moreover, many local businesses were planning for possible outsourcing opportunities. According to a Reuters report, the region’s fragile economies were expecting a big influx of investment money, and for Serbia, the pipe would have been the biggest investment in 15 years, with the total cost of the ambitious pipeline project between 16.5 bln and 50 bln euros, according to the East European Gas Analysis.
"We thought we'd earn enough to sustain us for the next five or six years," one of Serbian developers told Reuters. "We lost not only potential profits but also references for future deals."
According to estimates by Serbian Infrastructure Minister Zorana Mihajlovic, the nation’s developers have lost an opportunity to earn up to 300 mln EUR. Had the South Stream pipeline been built, she said, Serbia’s GDP would have added 2% at least. Also, there is a lost opportunity to obtain cheaper gas, the total amount in lost earnings for Serbia reaching 700 mln EUR.
Bulgarian authorities said recently they have lost 3.5-4 bln euros in investment and $600 mln yearly in transit fees. In Hungary, experts say the nation has lost $400-600 mln in investment capital.
Slovenia’s situation is also frustrating, as the nation’s oil and gas companies have spent 150,000 EUR of their own money on ‘preparation works’. Ljubljana is intending to seek compensation payments from Gazprom.