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Decision on South Stream route this summer

MOSCOW, April 8 (UPI) -- Gazprom, Russia's state-controlled energy giant, said it would choose the route for its South Stream natural gas pipeline by the middle of 2011.

"This summer we will choose one of three possible routes for the South Stream pipeline," Pavel Oderov, head of Gazprom's international business department, was quoted as saying Friday by the Dow Jones news wire.

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The pipeline was jump-started by the Kremlin to bypass traditional transit countries Ukraine and would move more than 60 billion cubic meters of natural gas per year under the Black Sea to customers in Western Europe. South Stream is backed by Gazprom and Italy's Eni, which both own 50 percent in the consortium.

Russia has been trying to convince Turkey to have the South Stream pipeline cross its territorial waters in the Black Sea. So far, Ankara has refused, saying it needed more documentation on economics, routes and environmental impact.

If Turkey holds on to its "No," Russia does have alternatives.

It could liquefy the gas -- either at the Black Sea coast or directly at the source field -- transport it in LNG carriers to Bulgaria, re-gasify it there and pump into a slightly shorter South Stream pipeline that would then cross the Balkans into Western Europe.

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The pipeline recently received a major boost when it Wintershall, the oil and gas arm of German chemicals giant BASF, said it would join the consortium, acquiring a 15 percent stake. France's EDF had announced last year that it would take 10 percent. The shares are expected to come from Eni's stake.

Critics have accused Russia of launching South Stream to torpedo Nabucco, a project backed by the European Union and the United States that would transport up to 31 billion cubic meters of Caspian and Middle Eastern gas per year to Europe, bypassing Russia to diversify Europe's energy import structure.

The South Stream consortium members deny trying to undermine Nabucco, arguing their pipeline makes economic sense.

Experts have questioned whether there is room for both projects as they vie for similar sources and customers, with analysts speaking of a "pipeline war."

A possible demise of nuclear power in Japan and at least parts of Europe could boost the gas demand significantly and increase chances for both Nabucco and South Stream to co-exist, analysts have said.

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