By Ilya Kharlamov
Turkey is the biggest foreign buyer of Russian natural gas after Germany. Through the Russia-Turkey Blue Stream pipe under the Black Sea alone, it is receiving 16 billion cubic metres each year. Talks in Moscow Wednesday between its Energy Minister Taner Yildiz and Russian Prime Minister Vladimir Putin produced agreements to intensify the Blue Stream flow and also the flow of Russian natural gas to Turkey through pipelines laid across Ukraine, Rumania and Bulgaria. Both updated supply contracts will stay in force for over 20 years. The Moscow talks also brought another important result, a green light for the planned South Stream pipeline linking Russia to Southeastern Europe to cross the Black Sea economic zone of Turkey.
According to Gazprom head Alexei Miller, groundbreaking on the South Stream project is already in sight:
“Turkey’s green light is a decision of milestone significance. It means that the South Stream pipe will be built as planned, before 2016. Late 2015 should see the first deliveries through the pipe.”
Gazprom, Italy’s ENI and Germany’s BASF are to invest about 15 billion euros in the South Stream project. The ground- and bottom-breaking are scheduled for 2013. Five years later, the annual flow through the pipe should reach 60 billion cubic metres. Once complete, South Stream will significantly reduce the need for precarious overland gas transit and thus strengthen energy security in many parts of Europe.
To have the project pushed through, Russia had to overcome insistence by EU officials including Energy Commissioner Guenther Ettinger that it should export its natural gas to Europe across Ukraine, rather than the Black Sea, and also admit independent gas producers to its export pipelines.
According to Deputy Gazprom head Alexander Medvedev, even if Russia gets managerial access to Ukrainian pipelines, even if Europe starts massively procuring LNG from every possible quarter and even after North Stream, South Stream and Nabucco start capacity operation, Europe’s annual demand for natural gas will still be outstripping the supply by about 20 billion cubic metres. This makes South Stream an economic necessity which cannot be allowed to be compromised by politics.
We have an opinion from Director of the Energy Development Foundation Dr Sergei Pikin:
“The project will certainly bear fruit, because Europe’s demand for natural gas will continue to grow. Competition from Nabucco, or parts of it, will be powerless to derail South Stream. Indeed, when Turkey gave its green light, it had already signed an agreement with Azerbaijan for Azeri natural gas to reach Europe across Turkish territory.”