Nabucco vs South Stream Gas Pipelines / Decembver 2011

Putin brings forward South Stream gas pipeline build
BBC News December 31, 2011

Russia has brought forward to late 2012 from 2013 the start date for building a pipeline to transport gas to Europe under the Black Sea, bypassing Ukraine.

Russian Prime Minister Vladimir Putin announced the move after Turkey gave permission for the South Stream gas pipeline to be built under its waters.

The first gas is expected to be pumped through the pipeline in 2015.

The move gives the project a clear run into the lucrative energy markets of Europe.

Kiev had had failed to reach an agreement with the pipeline’s owners. Russian state-controlled energy giant Gazprom has a 50% stake, Italy’s Eni 20% and France’s EDF and Germany’s Wintershall 15% each.

The main rival to the South Stream project is the EU-backed Nabucco pipeline, which is set to carry gas from the Caspian region to Austria, passing through southern Europe.

The Nord Stream, pumping gas from Russia’s northern fields to Germany, opened last month, bypassing Poland, which like Ukraine has also had disputes with Russia over gas.

‘Strategic partnership’
“I think it would be desirable to start (construction) at the end of next year,” Mr Putin told Gazprom chief executive Alexei Miller during a meeting at his house outside Moscow.

Mr Miller said the pipeline’s total cost would be 16.5bn euros (£13.8bn), of which Russia would pay around 7.5 billion euros.

In energy talks with Turkish PM Recep Tayyip Erdogan last year, Russian President Dmitry Medvedev hailed the countries’ “serious and major” co-operation, describing theirs as “a strategic partnership”.

With few energy resources of its own, Turkey is highly dependent on Russian gas, correspondents say.

It wants to become a major energy corridor by transporting Russian gas through its territory to the Middle East.

But analysts say the South Stream project concerns the European Union, which wants to diversify its energy supplies and break free of its growing dependence on Russian gas.