South Stream May Stay in Limbo for Years
The South Stream pipeline project designed to carry Russian natural gas to the European Union bypassing Ukraine will probably remain on hold for years, Bloomberg has reported.
According to New York-based risk research group Eurasia, the proposed project is likely to “remain in limbo for years as Russia continues to foment armed conflict in eastern Ukraine and the EU retaliates with bans,” Bloomberg said.
The lack of available alternative route for Russian gas deliveries to Europe means Ukraine “will remain a key transit point for about half of Gazprom’s shipments to Europe,” according to Eurasia. With Russian troops massing near the border the EU “now has little choice but to stand united in opposition.”
Moscow’s support for armed separatists in eastern Ukraine and retaliatory bans on Russian food imports from the EU strengthen the bloc’s resolve to halt the project, according to Eurasia analyst Emily Stromquist, said Bloomberg.
It also quoted the opinion of Katja Yafimava, a senior analyst at Oxford Institute for Energy Studies, that “politically it’s very difficult for the Commission to support South Stream as this might be seen as depriving Ukraine of its leverage toward Russia. Equally difficult, though, it is for the European Commission to “block South Stream as long as it can’t ensure security of supply for its south east Europe members by other means.”
Bulgaria, where the proposed pipeline is supposed to enter the EU, relies almost 100% on Russian gas deliveries via Ukraine to meet its gas needs. In 2009, south east Europe, including Bulgaria, remained without gas supplies for nearly two weeks due to a dispute over gas prices between Moscow and Kiev.
With a design capacity of 63 billion cubic meters a year, South Stream remains a crucial part of Russia’s dream to eliminate Ukraine as a transit route, Bloomberg highlighted. Gazprom has already spent about USD 3.1 B on Russia’s domestic network to prepare for South Stream, and plans to invest at least USD 18.4 B more.
