Matthew Bryza names four reasons why Russia halted "South Stream" project

Baku, Azerbaijan, Dec. 5

By Aygun Badalova - Trend:

After Russia has officially announced that the country halts the "South Stream" gas pipeline project, a lot of officials and experts expressed opinions on why such a decision was made.

Former U.S. ambassador to Azerbaijan, Director of the International Centre for Defense Studies in Tallinn, Matthew Bryza has four reasons on why such a scenario occurred.

In an interview with Trend, Bryza said Vladimir Putin has decided to announced the stopping of "South Stream" project implementation for several reasons:

-Save money by substituting a cheaper and relatively simpler project (Blue Stream expansion) for a more complex and expensive project (South Stream) at a moment when the drop in oil prices and Western sanctions are moving Russia's economy into a position that President Putin has characterized as catastrophic.

- Block diversified natural gas supplies from Azerbaijan, Iraq, and the Eastern Mediterranean via Turkey;

- Split Turkey from the rest of its NATO Allies and EU partners with regard to sanctions against Russia;

- Pressure Bulgaria and other EU member states to soften their conditions for realization of South Stream in the future.

Bryza also believes that the cancellation of the South Stream project should have no affect on European natural gas markets.

"Russia hopes to export to Europe the same volume of gas via Turkey and an expanded Blue Stream as it originally intended via South Stream," Bryza said.

Moreover, according to Bryza, President Putin may reverse this latest announcement at any moment and resurrect the South Stream pipeline.

Bryza believes that Europe doesn't need the additional 63 billion cubic meters of Russian gas promised by either South Stream or Blue Stream expansion.

"However, Europe could face less diversification, higher prices, and greater Russian geopolitical leverage if neither Turkey nor the EU counter Russian efforts to establish and control a natural gas trading hub on the Turkey-Greece border," he 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.

The "South Stream" pipeline project was to run through the Black Sea to the South and Central Europe, bypassing Ukraine, in order to diversify the natural gas export routes.

The pipeline was to have a 63 bcm capacity. At the time, it was estimated to have first volumes of gas delivered to Europe by 2015, while the pipeline itself was scheduled to being functioning in full by 2018.

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Aygun Badalova is Trend Agency's staff journalist, follow her on Twitter: @AygunBadalova

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