The Russian President says it is impossible to continue project implementation under present conditions. The same capacity gas pipeline will be constructed constructed instead of “South stream” towards Turkey over the Black sea.

It was said earlier that “South stream” gas pipeline (capacity 63 billion cubic meters) would transport gas to Central and Southern Europe countries via Black sea waters. First supplies were scheduled to start next year by reducing the amount of gas transferred via Ukraine by 30 bln. cubic meters.

Last week “Gazprom” announced that construction of “South stream” offshore sector would be started in December and sanctions imposed on Russia would not prevent gas pipeline start-up.

Government of Bulgaria made a decision to stop project implementation on its territory. At the same time as Bulgaria Italian government informed that gas pipeline is no more their priority.

According to V.V.Putin «it would be ridiculous to start offshore construction, reach the Bulgarian coast and face their block”. At the same “thanks” to their decision Bulgaria will lack 400 million euros every year in its budget. Putin said “if Bulgaria is prevented from acting as a sovereign state, it has a right to demand reimbursement from EU for denied profit».

According to results of negotiations with Turkish President Recep Tayyip Erdogan it was decided to develop cooperation with Turkey in terms of oil and gas industry. Moscow and Ankara concluded an agreement increasing the volume of transported gas via “Blue stream” also crossing the Black sea bottom. Next year Russia plans to reduce the cost of gas for Turkish consumers that can make the price for “blue fuel” almost equal to the price as for the German consumers.

PIPELINE CANCELLATION: CONSEQUENCES

According to specialists’ estimation decision on “South stream” construction cancellation will cause not only Russia to suffer losses. Assuming that Europe intensively raised difficulties against construction it is European gas consumers who will suffer after all.

Experts already called agreement between Moscow and Ankara the case “when economy overcame politics”. Turkey is a country which aims to be a participant of EU, but at the same time doesn’t want to communicate in terms of sanctions. Visit of Russian President finally put the things right.

Minister of Energy of RF A.Novak declared that the European commission had been blocking implementation of “South stream” project for several years despite Russia, Serbia, Bulgaria, Greece, Hungary, Croatia and Slovenia had signed inter-government agreements. Unstable relations between RF and the West current summer encouraged EU to intensify opposition for construction of gas pipeline.

THIRD ENERGY PACKAGE: EU PRESSURE

EU Third energy package assumes that gas producing companies shall not own gas pipelines laid on the territory of the union. One supplier can only use half of pipeline capacity, while other half is to be distributed via auction. EU representatives claim that “South stream” project didn’t meet these requirements.

Especially Hungary, Serbia and Bulgaria felt EU pressure. First two states were able to resist successfully. Even when Merkel declared that “Germany will make all efforts to put Hungary on the right track”, Hungarian politicians start to think about the possibility to quit European union in a case their country would have been influenced any more.

Serbian authorities also desired to benefit the construction of gas pipeline despite EU claims that relationship between Moscow and Brussels cannot authorize implementation of “South stream” project due to incorrect political conditions. Russian and Serbian representatives have held several meetings which made European commission strongly recommend Belgrade to “follow the Brussels decisions in terms of foreign policy and energetics”.

But construction of Hungarian and Serbian part of pipeline couldn’t change the situation dramatically because it is Bulgaria who should have implemented the project on its territory first. But the government of the country carries out European commission orders. Bulgaria stopped all works on the project in August 2014 unless “South project” meets all the requirements of European Law.

EUROPE: WHERE TO FIND GAS?

Russia supplies gas to Europe through 3 pipeline complexes. One of them, northern route, goes directly to Germany through Baltic sea. At the first sight this pipeline supplies sufficient amount of gas. But if for some reasons supplies through northern route would be reduced or Western Europe would start to transport gas to Eastern Europe or Ukraine, transportation of Russian gas may become a problem.

However the largest supplies go through central route, through the territory of Ukraine and Belorussia. At that point if Russian or Ukraine would close pipeline eastern countries will suffer first.

Agreement with Turkey shall save gas export markets for Russia, for Turkey it will give opportunity to control energy suppliesС from Russia to EU (that would certainly boost Turkish position at any negotiations with EU).

For Europe cancellation of “South stream” project will result only with negative consequences. European governments increase transit risks for themselves by limiting direct cooperation with the main fuel supplier.