Analysis: Oil and Gas Pipeline Watch

By BEN LANDO and KRISHNADEV CALAMUR  |  Feb. 26, 2008 at 1:09 AM
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Russian-Serbian deal on South Stream muddies Europe's gas waters

Russia's deal Monday with Serbia for the building of the South Stream pipeline adds another complex layer to Europe's pipeline wars.

Russian First Deputy Prime Minister Dmitry Medvedev, who is President Vladimir Putin's anointed successor, signed a deal with Serbian Prime Minister Vojislav Kostunica on the implementation of the project to build South Stream, which would transit 10 billion cubic meters of Russian natural gas per year through Serbia to the Balkans and on to Europe.

"This agreement serves interests of both, Russia and Serbia, and lays the foundation for the regime of energy security in the unified Europe," Medvedev said.

The comments were reported by RIA Novosti.

Last month Russia's Gazprom Neft, the world's largest natural gas company, agreed to buy 51 percent of Serbia state-owned NIS for a reported $580 million.

The race to supply Europe with gas is heating up. South Stream's main rival is the EU- and U.S.-backed Nabucco pipeline that would carry gas via Turkey through Europe. Nabucco is being painted as a way for Europe to reduce its dependence on Russia supplies, which account for nearly a third of EU's overall gas imports. Although Nabucco has some big European names who've signed on, it still lacks a gas supply.

South Stream is backed by Gazprom and Italy's Eni.

U.S. backs Nabucco for EU, critiques Russia

A European pipeline plan to import non-Russian natural gas from Asia has lacked commitments from gas producers but has received overt backing from Washington.

"The Nabucco pipeline will be built," Deputy U.S. Assistant Secretary of State for European and Eurasian Affairs Matthew Bryza said. "I am convinced because it makes commercial sense."

The 2,000-plus mile pipeline would funnel natural gas from the Caspian Sea through Turkey to Austria. Gas from the Middle East, including Iraq and others, is also being considered for feed. reports the target for completing the pipeline is 2013, with a capacity of 1.09 trillion cubic feet annually.

Bryza, in a visit to Brussels, said Nabucco would reduce dependence on Russian gas, which makes up more than a quarter of EU consumption now.

He criticized Gazprom, Russia's state-owned gas giant, for buying up European energy infrastructure.

"They should develop their own production more," Bryza said. Nabucco is seen as competition for South Stream.

China-East Asia pipeline construction starts

A pipeline designed to be capable of sending 1 trillion cubic feet a year of Turkmenistan gas to China for 30 years is now under way, China Daily reports.

The more than 5,600 miles of pipeline will cost an estimated $20 billion, covering 12 provinces as it feeds China's growing energy demand.

The China National Petroleum Corp. is building the line.

Six vie for Emirates' Dolphin pipeline

Technical bids have been submitted to the United Arab Emirates' plan to extend the Dolphin Energy pipeline, sending Qatar gas beyond Abu Dhabi and to Fujairah.

Al-Jaber Energy Services of Abu Dhabi, Consolidated Contractors International Co. of Greece, Dodsal of Dubai, Petrojet of Egypt, Italy's Snamprogetti and Stroytransgaz of Russia have all submitted bids, the Middle East Economic Digest reports.

All succeeded in the prequalification round. Technip of France, Techint of Italy and the China Petroleum Engineering Construction Co., which also prequalified, did not submit bids.

The technical bid is for designing and building the pipeline, with awards for contracts due later this summer.

The pipeline has been purchased for $200 million from Salzgitter Mannesmann International of Germany and the new contract will be a $350 million job of engineering and installation.

The 149-mile pipeline will extend the Dolphin line from Abu Dhabi, where it's currently funneling 2 billion cubic feet of gas per day from Qatar, to Fujairah.



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