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Thursday, 17.03.2011
Turkey blocks South Stream route to Europe
Moscow. The planned South Stream gas pipeline project through the Black Sea is being delayed. Reason: Turkey still needs to give its go ahead for the construction of the pipeline. The bargaining has begun.
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A memorandum of cooperation that the pipeline may run through Turkish waters had already been agreed upon by Moscow and Ankara in 2009. At that point a contract was signed by Russian Prime Minister Vladimir Putin and his Turkish counterpart Recep Erdogan.
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Through the sea instead of via Ukraine
The 3,000-kilometer-long route is supposed to run from the southern Russian port of Novorossiysk through the Black Sea to Vama in Bulgaria and from there in two strands to Austria and Italy. 900 km of the route will run under the water of the Black Sea.
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Russia hopes with this agreement to avoid the transit countries Ukraine and Belarus in its deliveries to Europe. With both of the neighbours, there had been disagreements over tariffs and delivery over the past few years which led to gas theft and disconnection of gas on several occasions.
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Nothing will happen without documents
At the moment, for sure, Moscow has only swapped one dependency for another. Ankara wants to be paid well for its permission to build the pipeline. ‘The devil lies in the detail’ of the principle agreement: without the necessary documentation Gazprom cannot start work, said the Turkish government.
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But so far, Gazprom cannot submit the, as the company has no permission for the investigation of the seabed. Last month, after long negotiations the Turkish authorities have assured that Gazprom may start with marine exploration from 31 May.
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This delays the timetable significantly: In principal South Stream, with its capacity to transport 63 billion cubic meters should have gone live in 2015. But without the required permits Gazprom can neither start looking for investors, nor begin construction.
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Moscow angry over delays
Moscow does not understand the reason for the delay, said Russia's First Deputy Prime Minister Igor Sechin. The Russians are angry that the Turks waste so much time. But Ankara knows the importance of its consent. It is believed that Turkey originally wanted concessions on the pipeline project Samsun - Ceyhan in return for their agreement, but their demands have now increased.
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It is possible that Turkey tries to push down the price of domestic gas supplies, Valery Nesterov, an analyst at Troika Dialog suspects. Russia seems to be prepared to meet Turkey half way. President Medvedev said Russia was considering to adjust the price formula for gas supplies to Turkey. This could be done only on a reciprocal basis.
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Rival Nabucco
Like the Russians, Europe is trying to create their own pipeline project: Nabucco. This pipeline also leads through Turkish territory. In contrary to South Stream, Nabucco will not only diversify the routes, but also looks to increase the amount of suppliers. Instead of Russia, Iraq, Azerbaijan, Turkmenistan and
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Kazakhstan, and perhaps some time in the future, Iran, are under discussion. Although both sides stress that the pipelines are not in competition with each other, for years the two projects have been in some kind of a race. While South Stream is negotiating with individual transit countries, Nabucco is still looking for gas suppliers.
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