Baku, Azerbaijan, Dec. 3
By Aygun Badalova - Trend:
Ukrainian crisis has become the final blow to the South Stream gas pipeline project, which has been just recently abandoned by Russia, Andrej Tibold, analyst at Eurasia Energy Observer believes.
"Russia feels it has been obstructed by the EU to build the South Stream pipeline, and the Ukraine crisis has dealt a final blow to that project," Tibold told Trend.
Russia might have hoped that increased instability in Ukraine would convince the EU of the necessity of South Stream, according to Tibold, however, the EU has responded by doing the opposite.
Tibold said that the EU felt that if it would facilitate the construction of the South Stream, by offering it exemptions to EU regulation, it would "reward" Russia for its involvement in the Ukraine crisis.
"Therefore it wants to maintain transit through Ukraine, amongst others, to create a shared interest with Russia to maintain "stability" in Ukraine," Tibold said.
During the negotiations in Turkey on Dec.1, Russian President Vladimir Putin said that under the current conditions, as well as due to the unconstructive position of the EU, Russia can't continue the implementation of South Stream project. Later, CEO of Russia's Gazprom Alexey Miller said that the South Stream project has been shut down.
The same day Gazprom and Turkey's BOTAS state pipeline company signed a memorandum of understanding on construction of an offshore gas pipeline across the Black Sea towards Turkey with the annual capacity of 63 billion cubic meters of gas per year.
Under this agreement, it is planned to supply 14 billion cubic meters of gas to Turkey and the remaining part - nearly 50 billion cubic meters of gas - to the Turkish-Greek border.
Tibold also mentioned that South Stream and the Southern gas corridor have been considered as competing concepts from the start. And this has not changed with the annulment of South Stream's construction.
"By building a subsea pipeline to Turkey, Russian gas will essentially compete with other Southern Corridor suppliers, such as Azerbaijan," Tibold said. "Much will depend on what model Turkey will ultimately choose to shape and regulate its gas market."
"Possibly the gas could be transported through the Trans-Anatolian Gas Pipeline (TANAP) pipeline or by a new Russian-Turkish JV project. Also a new pipeline project might be required in the EU to transport the gas through South Eastern Europe," Tibold said.
The Southern Gas Corridor is designed to transport Caspian gas to Europe. Gas which will be produced within the second stage of Azerbaijani Shah Deniz field development will be initial source for the project.
The gas to be produced as part of the Stage 2 of the field's development will be exported to Turkey and to the European markets by means of expanding the South Caucasus Pipeline and construction of TANAP and the Trans-Adriatic Pipeline (TAP).
Around six billion cubic meters of the total volume of gas within the Shah Deniz-2 project will be delivered to Turkey and 10 billion cubic meters to Europe per year.
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Aygun Badalova is Trend Agency's staff journalist. Follow her on Twitter: @AygunBadalova