Romania – Russia: Oil Pipeline Discussions February 2009

Romania – Russia: Oil Pipeline Discussions February 2009 – February 15, 2009
by Adrian Hamzescu

Romanian ForMin Diaconescu: Economic projects play an important part in any bilateral relationship

Romanian Foreign Minister Cristian Diaconescu said on Friday in Moscow that the Romanian authorities have been paying attention to energy sources and their alternatives, while Russian Foreign Minister Sergey Lavrov voiced Russia’s readiness to win Romania over to the South Stream gas pipeline project. Asked at a join news conference with Lavrov if Russia has invited Romania to join the South Stream project, Diaconescu said economic projects are playing an important part in any bilateral relationship and that alternative energy supply sources are an aspect considered by Romania.

‘Economic projects play an important part in any bilateral relationship and these problems are tackled in such relations. Romania has considered the energy sources for it and the alternatives in this field. We are for the materialisation of such projects against objective assessments,’ Diaconescu said after his conversation with Lavrov. The talks in Moscow were the first contact between the Romanian and the Russian heads of diplomacy since Diaconescu became Romania’s foreign minister.

There are currently two gas pipeline projects underway: the South Stream, which would transport natural gas from Siberia, and the Nabucco, designed to bring in gas from Central Asia. In an interview late January, Diaconescu said that Romania was not formally invited to join the South Stream project and that in economic and geo-strategic terms the Nabucco project would be the most feasible as far as Romania is concerned.

‘By our reckonings so far, South Stream is an energy corridor that is very expensive which is just in a preliminary stage of trials. Romania does not refuse any dialogue on this issue, but, for the time being, there is no feasibility study on which the idea of abandoning Nabucco in favour of joining the South Steam could be grounded,’ said Diaconescu. The 3,300-km Nabucco pipeline would bring gas from the Caspian Sea and the Middle East to European markets, crossing Turkey, Bulgaria, Romania, Hungary and Austria in its path.

Construction on it is scheduled to begin in 2010 and the pipeline should become operational three years later. The South Stream would originate in Russia and reach Bulgaria undersea, wherefrom it should fork out in two directions: toward Greece and Italy and toward Austria via Serbia and Hungary. Latest estimates put the cost of the South Stream pipeline at 25 billion euros, more than two times the initial estimates of 10 billion euros. The pipeline should be able to hold a transit of 47 billion cubic metres of gas a year.

By means of comparison, the North Stream pipeline to link Russia to Germany under the Baltic Sea is designed to allow the transit of 27 billion cubic metres a year. The South Stream is seen by Europeans as a rival to Nabucco, the project supported by the European Union which construction costs are put at 4.6 billion euros. In 2008, Romania produced 11.3 billion cubic metres of natural gas and used nearly 18 billion cubic metres. The one-third deficit between production and demand was covered by gas imports from Russia’s Gazprom, via Naftogaz, a Ukrainian company that coordinates the gas transport from Russia to Romania.