27 June 2014, 11:29

Analysts optimistic about South Stream future

Analysts optimistic about South Stream future
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The recent frictions between Gazprom and the European Union over the South Stream gas pipeline project have raised the question whether at all it's going to be completed. Numerous research offers different scenarios, from most favorable to the ones described as “the divorce of the century,” which may turn South Stream into Russia's version of Nabucco. However, most analysts are rather optimistic in their forecasts

Among them is Alfa Bank's Alexander Kornilov:

“On the one hand, the EU doesn't want to increase its dependence on Russia, but in fact the construction of South Stream doesn't change the landscape at all. South Stream just needs to increase the reliability and the sustainability of the Russian gas supplies to the southern part of Europe, and from that perspective I think Europe doesn't have anything against the project, and this is actually what we've heard more or less from the European regulators most recently,” Alexander Kornilov said.

Aleksei Grivach, deputy head of the National Energy Security Fund, also shares positive expectations.

“Finally I think that the issue will be solved in the way of mutual benefit because the EU and Russia both need South Stream to decrease the transit risks over Ukraine.”

This brings another big question of timeframe, and here analysts are more skeptical over the issue.

“The pipeline has been expected to be completed by 2018. Currently, I think it's unlikely that the recent problems experienced by the project will not affect the completion date. Also, the European Commission has recently said that it's prepared for further discussions that could move the realization of the project forward,” Grigory Birg, an investment analyst at Moscow-based independent analytical agency Investcafe said.

For now, market watchers say 2019 is most probably going to see the completion of the pipeline project and the end of the South Stream saga.

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