Russia Touts South Stream Pipeline As Europe’s Gas Lifeline

Submitted by Andy Tully via OilPrice.com,

Russia is mounting a major publicity campaign in Europe for its proposed South Stream gas pipeline in an apparent effort to reassure its EU customers that they can rely on Russian gas for the indefinite future.

The reason for Moscow’s public relations efforts is the continuing unrest in Ukraine. EU countries now get about 30 percent of their gas from Russia, half of it piped through Ukraine. Twice, in 2006 and 2009, that flow has been interrupted. Gas flows to Europe through Ukraine are intact today, but that status may change depending on whether relations between Russia and Ukraine improve or decline.

Meanwhile, Russia is working on an alternative that it says will satisfy everyone, except perhaps Ukraine: the South Stream pipeline, which would bypass Ukraine, instead crossing the Black Sea into Central and Southern Europe.

On July 17, a major Italian newspaper, La Repubblica, published a full-page article based on information from Russia Beyond The Headlines (RBTH), an agency of the Russian government. The article bore the headline, “South Stream On Its Way to Going Ahead.”

The article is part of a broader Russian public relations effort elsewhere in Europe promoting South Stream as a source of 63 billion cubic meters of gas to EU customers per year, meeting 15 percent of Europe’s current needs.

The article in La Repubblica said many countries have agreed to provide transit rights for the pipeline. Nevertheless, the European Commission has suspended approval of the project and urged member countries to freeze work on the pipeline until Russia and Ukraine resolve their differences.

Still, several countries in Central and Southern Europe, including Germany, Italy and Bulgaria, support South Stream as a necessary alternative to the Ukraine pipeline. And here’s where the competition arises. Greece, which not long ago faced possible expulsion from the EU, is positioning itself as part of yet another alternate route.

That’s the Southern Corridor, which would combine the Trans-Anatolian Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP).

Gas would move gas from Azerbaijan, on the Caspian Sea, through Georgia and Turkey – the TANAP – then across northern Greece and end in southern Italy – the TAP. Azeri exports would start at 16 billion cubic meters of gas per year. The project would rely in large part on Greece, which would provide the longest land route for the TAP leg of the conduit.

Athens says this alternative not only would reduce Europe’s need for Russian gas, it would tap newly discovered gas sources off the coast of the Greek island of Crete. Several international oil companies, including BP, Chevron, ExxonMobil and Shell, met recently in London and expressed interest in forging alliances with Greek energy companies.

The initial investment in Cretan oil is estimated to range from between $3.4 billion and $8.1 billion – a significant amount for a country that is just now emerging from four years of economic crisis.










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