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Russia wants EU to back South Stream

Dec. 3, 2010 at 11:35 AM   |   Comments

BRUSSELS, Dec. 3 (UPI) -- Russia would like the European Union to identify South Stream as a key EU energy project.

Russia's envoy to the EU, Vladimir Chizhov, said South Stream should get the same status as its competitor Nabucco.

"A week ago, at an international conference in Brussels that marked the 10th anniversary of the energy dialogue between Russia and the EU, European Energy Commissioner Guenther Oettinger made it clear when replying to a question about South Stream that he welcomed the construction of all pipelines that will bring gas to Europe," Chizhov was quoted as saying this week by Russian news agency ITAR-Tass. "We would welcome some more than just declarations, for example the decision to raise the status of the South Stream project to trans-European, like that of Nabucco and Nord Stream," the latter being a multinational pipeline project to transport gas from Russia under the Baltic Sea to Germany.

The EU is unlikely to give in to such a demand, however.

South Stream is pushed by Gazprom and has support from several eastern European countries. It would bring gas from Russia to southeastern Europe, but it directly competes with Nabucco -- a pipeline launched by Brussels to reduce Europe's dependency on Russian gas imports.

Backed by Germany's RWE and OMV from Austria, Nabucco would transport up to 31 billion cubic meters of gas per year from Caspian and Middle Eastern gas to Europe, bypassing Russia. Consortium members are currently in talks to secure gas from northern Iraq, Azerbaijan and Turkmenistan.

The Kremlin as a response launched South Stream, which would bring double the amount of gas per year and is vying for similar customers to Nabucco. Gazprom this week estimated the cost of South Stream to amount to roughly $20 billion -- for a pipeline that is expected to do little to diversify Europe's import structure.

Experts have questioned that there is supply and demand for both projects, an analysis that has resulted in what the media has termed the "pipeline war."

Ever since a row over gas prices with Ukraine in 2006, the Kremlin has been accused of using its energy reserves as a political pressure tool. The lack of trust has resulted in conflicts over Europe's diversification strategy, with Russia threatening to supply Asia's emerging economies instead.

The problems have intensified as Europe is pushing for renewable energy, and in the wake of the financial crisis demand and prices for gas have tumbled.

© 2010 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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