Frank Umbach: South Stream was geopolitical rather than economic project

South Stream gas pipeline project has been initially designed as a geopolitical rather than economic project, and Europe actually never needed it, Frank Umbach, Research Director at the European Centre for Energy and Resource Security (EUCERS) believes.

The pipeline was not really considered to bring new gas supplies to Europe, according to Umbach.

Umbach said that South Stream would have increased political pressure on Ukraine, which is still dependent on Russian gas. He also said with South Stream Ukraine’s negotiation power would’ve declined, along with decreasing Russian gas exports through Ukraine to Europe.

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.

Umbach believes that with its total capacity of 63 bcm, had it been implemented, the South Stream would have dominated South-Eastern Europe and would have made any other gas pipeline commercially inviable.

Umbach said that Gazprom was not willing to accept the EU’s regulation.

He believes that with its total capacity of 63 bcm, the South Stream would have dominated South-Eastern Europe and would have made any other gas pipeline commercially inviable.

He also added that the South Stream would’ve resulted in increase of Europe’s gas dependency on Russia, making a united and integrated gas market in Southeastern Europe and the Balkan states impossible.

On Dec. 1 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.

Umbach said that Russia does not want to give up the pipeline, but seems just to re-route it to Turkey instead of Bulgaria, which had stopped the project as it is not in line with EU laws and regulations.

But also Turkey, despite facing one of the most rapidly gas consumption markets in the world, does not need a new 50-63 bcm pipeline, Umbach believes.

Umbach belives that Turkey itself does not want to become too dependent on Russia and seeks rather to expand TANAP-TAP pipeline network for both commercial and geopolitical reasons and has recently intensified new negotiations with Turkmenistan and Azerbaijan in regard to the Trans-Caspian pipeline.

SOURCE: AZER NEWS