Friday 28 November 2014

Why does Russia terminate construction of the pipeline "South Stream"?

This breaking news has appeared in the heart of Europe at a press conference in Stuttgart, where meetings of representatives of the German business community with the Minister of Economic Development of Russia Alexey Ulyukayev took place a few days ago.

Answering journalists' questions at a press conference Alexey Ulyukayev said that he admits the possibility of terminating construction of the pipeline "South Stream".

"South Stream — is a way to remove transit risks for the European consumers if the European consumers have a demand for decrease in risks, we will construct South Stream if this demand isn't present, we won't build it" — Alexay Ulyukaev declared.



Thus, Europe is offered to decide upon whether to assume or, on the contrary, thanks to the pipeline "South Stream", to absolve themselves of transit risks related to gas supplies of 63 bcm, taking into account that this volume of gas is about 75 percent of the gas transit carried out at the high risk via very unstable Ukraine.

Talking about the press conference in Stuttgart, it is possible to expect that upon the Russian initiative, but in this case not upon Brussels, there will be a need once again to count resources necessary for replacing the gas imports from Russia.

As it happened before, in addition to traditional gas supplies from Norway, Algeria and some others, obviously, future gas supplies from Azerbaijan, Israel, and even Iran would be included into the list of potential gas resources. It would seem that there are many of such promising projects, but unfortunately, it will take quite a long time to get gas from them. No doubt, these projects have a future, but they are able only partially compensate for the gas share of Russia, and that will have to wait for many years.

Specific features and expected results for Europe from implement of these Caspian as well as Mediterranean gas projects deserve special attention and it is worth to highlight them closely in future blog posts.

However, now it is important that news from Stuttgart would be heard by Europe and, in particular, would be clearly known in Bulgaria becoming the first European country that will host the pipeline "South Stream" on its way to the EU and participate in determining fates of the project. That is why our special attention is turned now to this Balkan country and to the newly elected government of Bulgaria, which today really creates the future of the European energy security.

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