Azerbaijan, Baku, Dec. 17 / Trend / E.Tariverdiyeva /
The Heritage Foundation's leading expert on Eurasia and Trend Expert Council member Ariel Cohen believes the Russian gas pipeline project South Stream has a greater chance of implementation than the European project Nabucco.
"2010 was marked by the lack of progress on the Nabucco gas pipeline," Cohen told Trend over the telephone from Minsk.
He said in comparison more documents were signed for South Stream than European projects. In addition, Russia is committed strategically and geopolitically to provide an alternative to the slow-moving Nabucco. Moscow has almost-bottomless deep pockets and will proceed with South Stream even if it makes no economic sense, the energy expert said.
If at least one gas pipeline is built in the near future connecting the Caspian with Europe, it is likely to be South Stream, Cohen said. Russia is also building the North Stream to bypass export transit countries such as Belrus and Ukraine.
Nabucco gas pipeline project worth € 7.9 billion will transport gas from the Caspian region and the Middle East to the EU.
Participants of the project are Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE companies. Each of the participants has equal share to the amount of 16.67 percent. Construction of gas pipeline is planned to be launched in 2011, the first deliveries are scheduled for 2014. Maximal capacity of the pipeline will hit 31 billion cubic meters per year. Nabucco Gas Pipeline International shareholders will invest 30 percent of the total cost of the project; the remaining 70 percent will be loans.
South Stream gas pipeline was designed to transport Russian natural gas to Europe via the bottom of the Black Sea and then via Bulgaria, Serbia and Hungary. The project is realized by Italy's ENI and Gazprom, which signed an agreement to build an offshore gas pipeline on June 23, 2007.
The 900 kilometers long offshore section of South Stream would start from the Beregovaya compressor station at the Russia's Black Sea coast, and would run to Bulgaria's Varna. Total volume of investments in the project is estimated at over $14 billion.
Based on the plans, the pipeline will be commissioned by 2014. Its capacity should reach 63 billion cubic meters of gas a year. Total investment in the project is estimated at 25 billion euros.
The cost of both pipelines are prohibitive, the supply uncertain, and the market demand -- soft, Cohen belives. More likely, he said, a system of small pipelines called connectors, stretching to Greece and the Balkans, will be launched. Azerbaijan may also export compressed natural gas via Georgia to Bulgaria, and further to Romania, Hungary and Ukraine, via a projected called AGRI, announced earlier this year.
Another interesting energy geopolitics issue, Cohen added, is linked with the trial oil pumping via the Odessa-Brody Pipeline this year, which could open up great opportunities for Azerbaijani oil, especially if a pipeline is built to the port of Gdansk in Poland.
The Odessa-Brody oil transportation project sought to diversify oil supplies to Ukrainian refineries and develop the country's transit potential. The pipeline's construction was completed in May 2002. Its trunk has a length of 674 kilometers, with a pipe diameter of 1,020 millimeters. The capacity of the pipeline and the terminal is 9-14 million tons per year during the first stage.
During the first two years after the pipeline's construction, Ukraine unsuccessfully tried to negotiate on the transportation of Caspian oil from Black Sea to Europe. Not receiving any concrete proposals from foreign companies, the Ukrainian government authorized the use of the pipeline for transporting Russian oil in the reverse direction to the port of Odessa in late June 2004.