Russian President Vladimir Putin’s announcement that he is cancelling the planned $50bn (£32bn; €40bn) South Stream gas pipeline has caused a mixture of surprise, relief and dismay in countries dependent on Russian gas across central and eastern Europe.
Russia’s critics have long argued that, parallel to nuclear expansion, gas pipelines constitute “the long fingers of the Kremlin”, opening the way for political as well as economic influence. So this decision is a dramatic change of direction.
“It may be a bluff,” said Martin Vladimirov, an energy specialist at the Centre for the Study of Democracy in Sofia, “to pressurise the Bulgarian, Serbian, Hungarian and Austrian governments to unite behind accelerating the project, and make a better case for it to the European Commission”.
However, he favours a second explanation, that South Stream is “simply too big a burden” amid the difficult financial situation facing Russia’s state-owned giant Gazprom.
Europe has a falling demand for gas, and does not need the potential 63bn cubic metres (cu m) a year that South Stream would provide. The North Stream pipeline is only filled to a fraction of its similar capacity, and runs at a loss.
Instead, Mr Vladimirov believes, Gazprom is looking to new markets, turning its gas strategy eastwards. “It would need $100bn in the next four to five years to develop the Eastern Siberian fields and construct a pipeline to China,” he says.
Scrapping South Stream comes as a setback to the governments in Hungary and Serbia, among the strongest backers of the project, alongside the Austrian company OMV and the Italian ENI.
Source-BBC
