Vestnik Kavkaza: Dim prospects for South Stream – 2
The news of the readiness of Russia to finance the construction of a part of “South Stream” in Serbia revived interest in this project. However, there are a lot of questions which touch on not only Russia, but also its partners in the Caspian region.
A special talk on Turkmenistan
Under the development of such projects as South Stream and Nabucco great hopes were invested in Turkmen gas. Real data about oil and gas resources is the main state secret of Turkmenistan. Considering statements of the country’s leadership, Turkmenistan possesses such huge gas resources that can provide the whole world with it. The Turkmen authorities liked citing the results of the second stage of an officially independent expertise of Gaffney, Cline & Associates, the British company. The expertise showed that gas resources in the republic are more than 71.21 trillion tons. Earlier they were estimated at 44.25 trillion tons. Almost a half of all gas resources are concentrated in the South Iolotan gas field.
However, in the second half of May 2012, a big scandal broke out over the data on field resources: Western oil companies received documents from Turkmenistan which denied reports of the “independent” expertise. Gas resources of Turkmenistan appeared to be much smaller. And all explored gas fields are under the actual control of China. The National Bank of China allocated $8.1 billion to development of South Iolotan resources. MORE
See Part 1 http://vestnikkavkaza.net/analysis/economy/40867.html
Despite all promises of official Ashkhabad on implementation of new fields, experts are sure that the export to China is provided due to gas resources which used to be exported to Russia and could be used for South Stream.
A serious obstacle for accumulating of gas development in the Caspian sea and its export to the European markets is a conflict between Azerbaijan and Turkmenistan about some Caspian fields.
The situation became tense twice: in the early 2000s when the Turkmen embassy was closed in Baku and the sides were at the edge of a military conflict; and in the end of the decade when Ashkhabad stated on intention to address to the International Court of Arbitration for settling the conflict.
The agreement factors
It seems the future fate of South Stream will be determined by two main factors: an agreement of Ukraine to give its gas transporting system under management of the Russian-Ukrainian consortium and gas prices in Europe.Russia still hopes that Viktor Yanukovich will take real steps on establishing the gas transporting consortium, considering the improving economic crisis and the beginning of the next presidential campaign.
The problem of natural gas offers and prices in Europe is more difficult: “shale revolution” in the USA led to the situation when huge volumes of liquefied gas meant for the American market remained in Europe. Gas prices went down, and Gazprom has to give serious discounts to its clients in Europe. But the administration of the Russian gas monopolist hopes that soon “shale bubble” will burst and Europe will need more Russian and Caspian gas. In the opposite case, Russia will have to seriously reconsider its plans on South Stream.