Expert comments on prospects of South Stream revival

Expert comments on prospects of South Stream revival

Baku, Azerbaijan, June 20
By Elena Kosolapova - Trend:

There is a chance that the South Stream pipeline project, which envisages Russian gas supplies to Southern and South-Eastern Europe, will be revived, Katja Yafimava, senior research fellow in Oxford Institute for Energy Studies’s Natural Gas Research Programme belives.

“The South Stream project could be revived (but on a much lower scale) and it (as well as any other southern route) would need resolution of various regulatory issues with the EC,” Yafimava told Trend by email.

Earlier, Austrian Der Standard newspaper reported that Austrian energy group OMV and Russia's Gazprom are holding secret discussions on reviving South Stream gas pipeline project. OMV refused to comment on this issue, while Gazprom refuted these rumors.

Yafimava noted that Gazprom has long been looking to develop a southern route for its exports to Europe.

According to the analyst, there are two possibilities to realize these plans. The first option: Russian gas might arrive via the Black Sea to Turkey (the second string of Turkish Stream pipeline project) and then go further to Europe by utilizing capacity in Trans-Adriatic Pipeline (TAP) (which is under construction and might have spare capacity in the first phase and could also be expanded in the second phase) or in the Interconnector Turkey–Greece–Italy (ITGI) (which would have to be built). The second option: Russian gas might arrive to Bulgaria from where it could either go to Greece and Italy (thus repeating the southern route of South Stream) or go to Austria (via Serbia and Hungary) (thus repeating the northern route of South Stream).

“It is likely that the EC might be more supportive of any route that goes via Bulgaria rather than via Turkey due to difficult relationship between the EU and Turkey, and the EU being wary of Turkey assuming a significant transit role, in addition to what it will have due to the Southern Gas Corridor,” Yafimava said.

But Turkey would likely oppose it, she added.

The expert noted that none of these versions of the South Stream, even if they are built, would affect the South Gas corridor, which will deliver Azerbaijani gas to the EU.

“But it is possible that before Gazprom builds any of these southern routes (if any), it might first utilize capacity in TAP should there be not enough Azeri gas to fill it,” Yafimava said.

Gazprom refused from the South Stream gas pipeline in late 2014 because the European Commission did not grant an exception from the rules of the Third Energy Package, which, in particular, says that one gas provider should use no more than 50 percent of the pipeline capacity, and the remaining capacity should be put up for auction. Later this project was replaced by the Turkish Stream pipeline, which will pass through Turkey. Gazprom started construction of the offshore section of the Turkish Stream pipeline in May 2017.

Follow the author on Twitter: @E_Kosolapova

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