Gas crisis gives fresh impetus to Nord Stream, South Stream and Nabucco

by Kostis Geropoulos

Nord Stream AG and Nabucco Gas Pipeline International GmbH said their respective projects are urgently needed for the European Union.
The crisis triggered by Russia's natural gas dispute with Ukraine has brought efforts to build alternative pipelines to the forefront, but the companies said that the projects were already moving forward.

Nord Stream spokeswoman Irina Vasilyeva told from Moscow on January 9 that the pipeline across the Baltic Sea will carry 55 bn cm of gas from Russian fields to Western Europe, about a quarter of the gas imports that will be required by the EU in the in 2010s.
"Nord Stream is already developing as fast as it can... One can not accelerate infrastructure projects because they have to fulfil all technical and environmental requirements according to international legislation and that takes time," Vasilyeva said.

Nord Stream is currently awaiting the outcome of an environmental impact review and needs the approval of both Sweden and Finland.
"That process should get renewed impetus and may get the green light during this year if Brussels applies more pressure," Chris Weafer, chief strategist at Moscow's UralSib bank, wrote in a note to investors on January 9.

The Nord Stream spokeswoman said the pipeline "continues developing according to its plan and on schedule". She noted that it will come faster than other infrastructure projects also designed to cover this import gap.
"Nord Stream is in no competition to other gas supplying infrastructure projects," she added.

It is no coincidence that Russian Prime Minister Vladimir Putin met with his good friend Gerhard Schroeder, the German ex-chancellor and president of the committee of shareholders from Nord Stream, in St Petersburg on January 7. Putin said the gas crisis with Ukraine and its effects in Europe boosts the North Stream pipeline project.
The Russian premier said the current crisis finally convinced European consumers that the pipeline is necessary and should be completed as soon as possible.

A day later, in a meeting with western journalists in his residence in Novo-Ogaryovo outside Moscow, Putin further drove that point home. He said Russia realised that such problems may appear long ago with Ukraine and decided to diversify ways of supplies its energy resources.
"For this purpose we initiated the construction of north-western pipeline at the bottom of the Baltic Sea and another pipeline which we call South Stream at the bottom of the Black Sea. That is why we also built the gas pipeline Blue Stream to Turkey at the bottom of the Black Sea, by the way now it's fully loaded, and this eases the problem a little," Putin said.

Konstantin Kosachev, the head of the Russian Duma Foreign Affairs Committee, echoed Putin's statement in Brussels on January 8.
Asked if the current crisis will give a new impetus to the Nord Stream and South Stream pipelines bypassing transit countries, he said: "Hopefully yes. For us the Nord Stream and South Stream are not an attempt to set additional pressure on Ukraine. For us it is a kind of security against this type of crisis. As soon as we have an alternative routes for supplying gas to Europe, we will not have any problems at all with the Ukrainians, because it will be free competition between different routes of gas supplies and this is what market economy is about."

Meanwhile, Nord Stream's Vasilyeva reminded that the EU confirmed years ago Nord Stream as a priority project for Europe.
"The EU has never waivered from its support of Nord Stream because it is a project urgently needed for supplying additional volumes of gas for the European Union and it will be no substitute for gas supplies transiting Ukraine because all volumes are needed for the European market," she said.

She refused to speculate if Nord Stream, had it already been completed, would have helped alleviate the effects of the gas crisis, but noted that "additional routes mean diversification of gas routes and also allow more flexibility from the technical perspective. So in this respect the more routes the more secure the customers feel."
Regarding the South Stream project, Weafer said that "while not subject to the same political problems as its northern counterpart, will need a considerable amount of financing. That project may also attract more urgent support from the EU as part of the diversification process and get built more quickly."

But the EU so far is backing its own beacon project -- Nabucco. Asked if the gas crisis with Ukraine and its effects in Europe boosts the Nabucco project, spokesman Christian Dolezal told on January 9: "Yes, but I mean, look, for us, as a consortium, we see that Nabucco was an attractive project in 2008 and the years before and will be a very attractive project in the in 2010s. For us it is important now to develop the political support."
He said that the consortium appreciates the fact that EU Energy Commissioner Andris Piebalgs has strongly supported the project "and we hope to we move forward."

Asked if the current gas crisis might help Nabucco's chances, Ferran Tarradellas Espuny, the spokesman for Piebalgs, told on January 7 that, "with or without crisis Nabucco is very important and we are going to push it forward nevertheless. If it has value I will let you judge it. But for us it was always a very important project to move forward."
An international political conference on the progress of Nabucco is planned to take place in Hungary's capital Budapest.
"We are now negotiating and we -- I mean the Nabucco countries -- on a ministerial level, a government agreement between the transit countries. It very important to have this political attention and political support from all sides and we are optimistic that we are moving forward," Dolezal said.

The Nabucco spokesman reminded that diversification is an important matter for Europe and the EU needs all the infrastructure projects it can get to meet rising gas demand.
"With the Southern Corridor, with the Nabucco project, we try to establish diversification of routes and diversification of gas portfolios," he said. "This is not an anti-Russian project. Nabucco is a pro-European project. We always said we want to treat every shipper equal in Nabucco. If it gas coming from Azerbaijan, from Iraq or from Russia, it doesn't matter."

Dolezal would not speculate if Nabucco, had it been already completed, would have helped alleviate the effects of the gas crisis.
"We know that Nabucco on a full load could deliver 31 bn cm, but it just a certain amount. It can never ever substitute Russian gas through Ukraine. That was never the plan for Nabucco because high quantities of Russian gas will be needed for Europe in the future. That's a fact and that will never change," Dolezal said.
EU energy spokesman Tarradellas Espuny agreed, saying: "It will be part of the solution but it will not be the solution."

The public perception, however, is that Nabucco will not happen and the EU is just trying to put a good face on an unlikely project.
"I don't think Nabucco is going to happen," Claudia Luxon, an Austrian resident whose country's natural gas supplies from Russia were down 90 %, told. "Now that is winter we're just waiting to see what Putin is going to do."