South Stream Full Steam

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abarrelfull wrote on 01 Nov 2010 09:08
Tags: bulgaria edf gazprom russia serbia south-stream

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Gazprom has been somewhat blindsided by the massive changes in the gas business in the last couple of years. Their customers who seemed to have no other option, are now investing in shale gas and LNG. Nabucco, which seemed to be a no hope project is back in favour and potentially connecting Iraq to Europe.

In such an environment, Gazprom have chosen to go full steam ahead on South Stream, their pipeline under the Black Sea. Thery are trying to get as many companies and countries on board as possible.

Bulgaria:

Gazprom and Bulgarian Energy Holding EAD signed an Agreement on FS for Bulgarian section of the South stream gas pipeline.

Serbia:

Feasibility study for South Stream section in Serbia to be shortly finalized

Even France might get on board:

In particular, they addressed the steps towards the French company’s entry in the shareholding structure of South Stream AG

To push the project forward, Gazprom has appointed Marcel Kramer to head the project company. Mr Kramer has worked for Gasunie of the Netherlands, and Statoil, among others. An interview with him is available here.

Gazprom faces a huge challenge, to which South Stream may or may not be a partial solution. I particularly noticed something which Mr Kramer said in his interview which could be more important for Gazprom.

My third observation on this is that there have been statements made about the so-called increased dependence on Russian gas. But I have myself done some analysis on that subject and I don’t see where do the numbers come from. I don’t understand why a project like South Stream could lead to significant changes in what is called dependence. This word suggests something negative and I dont support it at all. Moreover, I object to the word dependence because there is a mutual relationship between Europe and Russia which is crucial to both parties. South Stream will definitely become a win-win solution for both sides

As with all such projects win-win should be the aim. However the root cause of Gazprom's problems has been that it viewed business as a win-lose game. Recent developments have tended to suggest that this mind set might be changing. If so them South Stream could really be a mutually beneficial project, and not the bait in a big mouse trap.