Natural Gas: Moscow scores against Brussels again
12 October 2010
"In the muted but high-stakes war between the EU and Russia to control the gas pipelines from Central Asia to Europe, Moscow has just racked up another point against Brussels,” writes La Tribune. Wintershall, a German subsidiary of the chemical colossus BASF, is about to sign on to the South Stream project. "This is another hard knock for Nabucco, the rival gas pipeline project backed by the EU, which was to bypass Russia in transporting gas from Central Asia.” According to the French financial daily, “the advent of a German company will end up discrediting this $25bn-plus (€18bn-plus) project”. Initiated by Russia’s Gazprom, South Stream is backed by the Italian oil and gas utility ENI. In the spring of 2010, the two corporations bolstered the project’s European credentials by both pledging to transfer 10% of theirs stakes to the French utility EDF.
Nabucco, on the other hand, appears increasingly unconvincing, adds the French daily, for want of sufficient natural gas reserves to justify its construction. Gazprom has in fact “methodically drained the Central Asian gas reserves by clinching multiple long-term purchase contracts in the region, thereby reducing by as much the volumes that Nabucco could carry". As Pierre Noël, an energy specialist at Cambridge University, explains to La Tribune, "By announcing the construction of the gas pipeline even before securing the gas reserves, Brussels killed the project."
But South Stream still has issues of its own to address. According to the EUobserver, Koen Minne, the CEO of the Belgian group Enex, is supposed to sign a deal for compressed natural gas (CNG) with Turkmenistan in November. Under that agreement, Enex and a consortium of European companies are to transport between 3 and 4 billion cubic metres p.a. of Turkoman gas to the EU. The gas would be shipped across the Caspian Sea to Azerbaijan, then relayed to the EU via the Baku-Tbilisi-Erzurum Azero-Turkish pipeline.