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The Russian president has announced a stop to the construction of the South Stream pipeline claiming the EU has put spanners in the works despite the common need to hedge against transit risks.
The statement came as a shock to many and sparked an outcry from Hungary and Serbia, who accused the EU of torpedoing the project that was supposed to ensure uninterrupted supplies of natural gas bypassing the volatile Ukraine.
However, according to the latest report from Vedomosti, the companies that are working on the project were not authorized to abandon the operations altogether. Only four corporations are eligible to make such a decision – Gazprom (holding a 50 percent interest), Italy’s ENI (20 percent), France’s EdF and Germany’s Wintershall (15 percent each), said a representative of South Stream Transport.
The news might indicate that the Kremlin’s stance was meant as a shock treatment, tit-for-tat step to scare the EU, and that the operations are put on freeze, rather than cancelled.
A piece of evidence that appears to confirm the rumour is that the participating countries do not comment the situation and are not taking steps to denounce the contract.
Earlier, Russia-IC reported that the construction of the maritime stretch of the South Stream pipeline has been delayed for a month, said Vladimir Markov, a member of Gazprom’s management board. He did not specify the reasons for the hiccup, but indicated they are of purely technical nature.
He dismissed claims that the project has been affected by the international sanctions and maintained that the construction will be completed on time.
Analysts do not consider a one month delay a considerable issue.
The South Stream project is aimed at strengthening the European energy security. It is the key project in the diversification strategy for gas supply routes to the EU. The South Stream gas pipeline will ensure a direct connection between hydrocarbons suppliers and consumers thus raising significantly the energy supply security on the entire European continent.
Experts share the opinion that in the medium and long term gas demand will grow in the European Union. The countries which used to consume moderate amounts of gas for industrial purposes are likely to guide their economies towards its increased utilization, since coal, fuel oil and nuclear power are less environmentally-friendly if compared to natural gas. Regardless that indigenous production still satisfies the bulk of consumption in Europe today, it will steadily decrease in time. Europe will need more imported gas and, accordingly, new transmission capacities.
Author: Mikhail Vesely
