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    Obstacles to Force Russia to Abandon South Stream?

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Summary

Russia is considering the possibility of failure of one of its major energy policy projects.Kommersant reports that Russia is considering giving up...

by: C. A. Ladd

Posted in:

South Stream Pipeline, Natural Gas & LNG News,

Obstacles to Force Russia to Abandon South Stream?

Russia is considering the possibility of failure of one of its major energy policy projects.

Kommersant reports that Russia is considering giving up the South Stream gas pipeline project in case it meets insurmountable obstacles after failed negotiations when Russia did not succeed to get Turkey’s agreement for gas pipeline’s construction on the bottom of the Black Sea in its economic zone.

In the absence an agreement, Gazprom and the Russian government are currently studying various options for a "cheaper version" of South Stream.

Last week, Russian Prime Minister Vladimir Putin instructed his energy minister to investigate the possibility of building an LNG plant on the Black Sea coast.

“The LPG plant will be concomitant part of the South Stream project. However, if we face some overwhelming obstacles, then this constituent part could turn into an absolute alternative to the project,” remarked Dmitry Peskov, spokesperson for Putin.

Turkey's delay in granting approval to the laying of pipes in its Black Sea territorial waters appears to represent a major obstacle to South Stream's construction. Turkey claims that it cannot give the go-ahead before receiving additional documentation from Gazprom, but Russia suspects that Ankara has other reasons for procrastinating.

Moscow suspects Ankara is trying to trade its consent for a rebate on the price of gas imported from Russia.

Mikhail Krutikhin, partner of RusEnergy, says that talk of giving up on South Stream is no more than “bluffing” by the Russian authorities.

Krutikhin also claims that Ankara understands perfectly well Russia’s game.

“Russia cannot give up South Steam […] because this would be too big a blow for the prime minister [Vladimir Putin],” he is quoted by Kommersant as saying.

"Most likely, the Turks will try to obtain concessions from Moscow in terms of lower gas prices and better conditions for the take-or-pay deal. But in any case, those would be protracted talks, so we should reach for our buckets of popcorn," Krutikhin added.

Read the Full Article (in Russian) HERE