Russia starts 16 bln-euro gas project

ANAPA, Russia - Hürriyet Daily News

Russian President Putin (R) is seen with Gazprom’s CEO Alexei Miller. REUTERS Photo

Russian President Vladimir Putin officially launched South Stream, the 16 billion-euro pipeline project to carry gas to Europe, which also received Turkish approval despite Ankara’s rival plans.

“This event is important not only for Russia’s energy market but for the entire European energy market,” Russian leader Vladimir Putin said yesterday at a ceremony in the Russian Black Sea city of Anapa, where the gas originates.

While Turkey is not considering becoming a shareholder in the project, it might consider acquiring gas from South Stream, Turkish Energy Minister Taner Yıldız told a group of journalists on his way to Anapa.
South Stream is perceived to rival other projects aiming to transport gas to Europe via Turkey, such as the Trans Anatolia Pipeline (TANAP) project, a $7 billion project that will be realized mainly by Turkey and Azerbaijan, but Turkey has given its consent for the pipeline to cross its seas. The 925-kilometer undersea pipeline crosses Turkish territorial waters before reaching Bulgaria and continuing onshore to Italy across Serbia, Hungary and Slovenia.

 “I would not be here if I thought that the start of South Stream was the last nail in the coffin of other southern corridor projects like Nabucco,” Yıldız told members of the press in Anapa. Nabucco is one of the two competitors carrying Azeri gas to Europe from Turkey.

The southern corridor, the concept of transporting gas to Europe through alternative southern lines, should be considered a package of projects according to Yıldız. “South Stream is an important link in this chain.”

Yıldız said, “Although in the short term [other alternatives] might look like rival projects, in the mid and long term they are not. As Europe needs more natural gas, there will be the need for an additional three or four projects like that. This is why we have a positive approach to South Stream.”

Turkey, however, has no intention of becoming a shareholder in South Stream, as it has TANAP and Nabucco West on its agenda, he said.

South Stream officials said the project highlights the importance of Turkey as an energy corridor. They also expressed their satisfaction with the cooperation shown by Turkey.

The realization of South Stream emphasizes Turkey’s role as an important energy corridor, Sebastian Saas, the spokesman of the consortium responsible for the project’s offshore section, told the Hürriyet Daily News yesterday.

Turkey is an essential part of the project and the cooperation and pragmatism of the Turkish government and its professionalism have always been appreciated,” said Saas.

It is up to the Turkish government to have the final say on the issue, but transit fees are not applicable as exclusive economic zones are considered semi-international waters according to international maritime law, said Saas.

The pipeline is a first in the sense that it is both the longest and deepest undersea pipeline. “When you look to Blue Stream [between Turkey and Russia] and Nord Stream, one is the longest and the other is the deepest. But South Stream is the longest and deepest at the same time,” said Saas. “It is also a masterpiece of cooperation when you consider the number of countries partnering in the project.”

Companies from EU member countries – Italian ENI, French EDF and German BASF SE/Wintershall Holding – are partnering with Gazprom in the project’s offshore section. The onshore section is owned half by Gazprom and half by the national company of the country it passes through.

South Stream will connect the world’s largest natural gas reserves in Russia with consumers in the EU, according to company officials. But questions linger as to the onshore part of the project, since its status is unclear regarding EU regulations that bar suppliers from owning transportation capabilities.
Saas did not answer questions on the issue, saying he represents the consortium responsible for the project’s offshore section only.

Throughout the ceremony, Russian officials said it was a Russian-European project. “South Stream resolves several issues at the same time,” said Alexi Miller, chief executive of Gazprom. It will increase Russian supplies to Europe and it will mitigate transport risk, he added.

South Stream is designed to bypass Ukraine, with which Russia has had several problems in the past.
Russian officials said South Stream would provide uninterrupted delivery of gas to Europe.