Pipeliners

MOSCOW, June 26 (RIA Novosti) - The South Stream gas pipeline will account for 35% of Russian gas supplies to Europe by 2015, Gazprom CEO Alexei Miller said on Friday. "We have taken the decision to increase the pipeline's capacity to 63 billion cubic meters. This means it will account for 35% of all Russian gas supplies to Europe in 2015," Miller said at an annual meeting of Gazprom shareholders. South Stream is a rival to the Western-backed Nabucco pipeline, designed to bring gas from Central Asia and the Caspian to Europe bypassing Russia. The European Union, nervous about growing energy dependence on Russia, is backing the project despite the current economic crisis. Miller described Gazprom's pipeline as "balanced and economically efficient," and said the South Stream and Nord Stream projects were the company's "strategic investment" in improving European energy security. Intergovernmental agreements have been signed with Bulgaria, Serbia, Hungary and Greece to lay the surface pipeline. Similar agreements are currently being negotiated with Slovenia and Austria. Investment in the South Stream project has been estimated at 25 billion euros ($35 billion).

BERLIN, June 26, 2009 (UPI) - Former German Foreign Minister Joschka Fischer has been hired to lobby for the EU gas pipeline Nabucco. Fischer, a former Green Party leader, is due to sign a six-figure contract with the Nabucco pipeline consortium for a political and PR consulting job, the German Manager Magazine reports in its Friday issue. Germany's RWE and Austrian OMV will pay the salary of the former politician who has been teaching at Princeton University for the past three years. The 2,000-mile Nabucco pipeline is a key European energy project. It is intended to bring 31 billion cubic meters of gas per year from the Caspian Sea to Austria via Turkey, Bulgaria, Romania and Hungary. The EU with Nabucco wants to decrease Europe's energy dependence on Russia. Washington also backs Nabucco. Differences between the consortium and transit countries and Russia's repeated efforts to torpedo Nabucco have delayed a final agreement on the project. Nabucco is also in danger because gas supplies are not yet secured. Kazakhstan's Deputy Energy Minister Acet Magauov said at the NATO summit in Astana Friday that Kazakhstan will not have gas to supply the pipeline, Radio Free Europe reports. EU officials are nevertheless optimistic that a deal on Nabucco can be signed this year. The magazine writes that Fischer is employed first and foremost to massage Turkey, a key transit country. Ankara has been bargaining with its support for the project, linking it to a quicker EU accession process and demanding 15 percent of the pipeline's gas as transit fees. The consortium may hope that Fischer is able to drive back Turkey's demands. "Fischer is highly regarded in Turkey because he was always open to it joining the EU," Manager Magazine writes. That pretty much makes Fischer a competitor of his ex-boss and political ally, former German Chancellor Gerhard Schroeder, who is lobbying for the Russian-backed Nord Stream pipeline aimed at connecting Russia and Germany directly under the Baltic Sea. Schroeder heads the advisory board for the Nord Stream consortium, made up of Russia's state-controlled energy giant Gazprom, Germany's Eon and Dutch Gasunie. His decision to back Nord Stream for money was harshly criticized at the time, because Schroeder had signed an agreement with the Kremlin to green-light the pipeline while still in office.

June 26, 2009 - (Reuters) - MOSCOW, France's GDF Suez (GSZ.PA) will likely get a nine percent stake in the Nord Stream pipeline, running from Russia to Germany, the project leader, Russia's Gazprom (GAZP.MM), said on Friday. "The level of participation of Gaz de France (GDF Suez) will be the same as of Dutch Gasunie," said Gazprom's export chief Alexander Medvedev. Gazprom has 51 percent of the project, Gasunie has 9 percent and Germany's E.ON EONG.DE and BASF (BASF.F) share the rest.

MOSCOW, June 25 (Reuters by Simon Shuster) - The European Union is discriminating against Russian-backed gas pipelines in favour of Nabucco, the head of Gazprom's foreign department, Stanislav Tsygankov, said on Thursday. "When you look at the regulatory treatment of Russian-linked projects compared to European ones, one is reminded of the famous book by George Orwell that says all animals are equal but some are more equal than others," Tsygankov told a news conference. "Nabucco is getting the green light everywhere ... while our gas transport projects, South and North Stream, are constantly facing regulatory barriers."

06-19-2009 - Upstream OnLine - The Russia-led Nord Stream gas pipeline group said today it was upbeat about getting permits from all Baltic Sea countries, despite identifying about 50 World War II munitions dumps along the link's subsea route. "About 50 munitions (sites) in total have been identified on the route and will be handled safely in line with the existing practice...," Nord Stream spokeswoman Irina Vasilyeva told Reuters. The Nord Stream consortium aims to have the twin pipeline up and running in 2011, bringing 55 billion cubic metres of Russian gas to Germany and further to other EU countries each year across the Baltic seabed. But the timetable came under threat after several Baltic countries expressed concerns that the pipeline could damage the environment, especially as it would pass close to dumped World War II munitions. Permits to build and operate the pipeline are needed from Russia, Finland, Sweden, Denmark and Germany. Russia's Natural Resources Ministry said yesterday that Sweden and Denmark had asked to receive further documents covering the project's ecological impact. Vasilyeva said the request was a step forward rather than a step back for the project as it was taking talks on a number of outstanding unresolved issues to a national level after three months of successful multi-national consultations, which de facto cleared the project. "This step has concluded the public participation phase of the Nord Stream project," she said adding the group hopes to solve outstanding issues over the summer and start construction of the 1220 kilometre pipeline as planned in early 2010. The Nord Stream project involves Russian gas export giant Gazprom, Germany's E.ON and Dutch player Gasunie. Many European politicians want reduced dependency on Russian gas, which already supplies about one quarter of Europe's gas demand. Gazprom argues that new pipelines will lessen the continent's dependence on transit states and thus boost energy security.

BAKU, Azerbaijan, June 19, 2009 - (UPI) -- Azerbaijan is seeking to interest other Caspian producers in using its export pipelines. Since it became operational in May 2006, the Western-financed and operated $3.6 billion, 1,092-mile, 1 million-barrel-per-day Baku-Tbilisi-Ceyhan pipeline has become Azerbaijan's main export pipeline. The Azeri government has consistently sought to convince other Caspian oil-producing nations to utilize the pipeline's export capacity. Baku's efforts to acquire other nations' exports increased after the brief Georgian-Russian military confrontation last August, which completely shut in Azeri exports, costing the nation more than $1 billion in lost revenues. Beginning in October 2008, Kazakhstan began to use the BTC pipeline. Azerbaijan's Analiticheskoe I Informatsionne Agenststvo FINEKO reported June 18 that since then BTC has carried more than 1 million tons of Kazakh oil, 163,000 tons in May alone. According to the Azerbaijan State Statistics Committee, during the first five months of May 2009 Kazakh oil exports via the BTC pipeline totaled 754,800 tons. In a further sign of increased cooperation, in the wake of last year's military conflict, the State Oil Co. of the Azerbaijan Republic and Kazakhstan's KazMunaiGas last November signed an agreement on delineating principles of a joint Trans-Caspian Project oil export system.

BAKU, Azerbaijan, June 19, 2009 (UPI) -- Turkish officials delayed the signing of intergovernmental agreements for the Nabucco gas pipeline but promised a move as early as July. The Nabucco gas pipeline consortium has not set a firm date for the signing of an agreement on the $10.7 billion project. It was expected Ankara would host a signing meeting Thursday, but Turkish energy officials have delayed that for another month, the Trend news agency reports. Mihaly Bayer, the Hungarian envoy to the project company, Nabucco Gas Pipeline International, had complained over the slow process on the agreements but joined Turkish officials saying agreements would be reached soon. Applications from potential suppliers would follow the signing of the intergovernmental agreement, with financing moving ahead in 2010. Nabucco would travel 2,050 miles from the Caspian Sea through Turkey north to European markets. Europe sees the project as a means to diversify the regional energy sector, which is dependent on Russian natural resources. The project faces obstacles because of a lack of firm commitments from potential supplier nations, while Turkish demands for discounts delayed a pending meeting on the pipeline.

06-12-2009 - Financial times by Anna Fifield - Gazprom is in talks with Iran and Pakistan to build a large section of a long-awaited gas pipeline between the two countries, a senior Iranian energy official says. The participation of Russia's state-controlled energy group could kick-start the pipeline project, which has been delayed because of disagreements that have led India to pull out. "Both we and Pakistan are talking with Gazprom and we have agreed that Gazprom can be a partner [to construct] the pipeline inside Pakistan," Hojatollah Ghanimifard, vice-president for investment affairs at the National Iranian Oil Company, told the Financial Times. The proposed 2,600km gas pipeline would transport gas from Iran to Pakistan and India, providing them with 60m cubic metres of gas a day initially, eventually rising to 150m cu m a day. The project, valued at $7.6bn, has been under discussion since 1994 but has been bedevilled by delays, most recently because of disagreements between India and Pakistan over transit fees. India has now walked away from the deal. But Mr Ghanimifard said the project was making progress. "Last week I was in Russia, I had the pleasure of talking to high authorities in Gazprom and I proposed to them that this was in the interest of Pakistan and invited them to become involved," he said. He added the Pakistani portion of the pipeline would stretch about 900 km. "They liked this idea and accepted. We are going to see each other trilaterally in Tehran," he said. He said the meeting was due to take place before the end of July. Gazprom said: "We are interested in this project - but so far there have been no specific negotiations." Analysts say Gazprom is interested partly because it seeks a way to channel Iranian gas away from Russia's traditional markets in Europe. Its interest and technological expertise could also inject momentum into the delayed project, they say. India, which imports about 70 per cent of its oil and gas, would still have the option to join at a later date, Mr Ghanimifard said. "When you're talking about a long relationship that will last decades, we cannot say that even though they are out for a few years, they will be out forever," he said. About 700km of pipeline from the South Pars gas field has already been built inside Iran, and the remaining 200km to the Pakistani border is under construction, Mr Ghanimifard said.

BAKU, Azerbaijan, June 10, 2009 (UPI) -- NATO pledged its support for the Nabucco natural gas pipeline to Europe and recognized the importance of Azerbaijan as a key energy supplier, officials said. "NATO realizes the importance of the Nabucco project and backs Azerbaijan," said Michael Gaul, a top economic security official at NATO. "Undoubtedly, Azerbaijan as a supplier plays a very important role." His comments came during an energy security conference organized in Baku by the Azeri Foreign Affairs Ministry. Europe sees the $10.7 billion Nabucco project as the answer to its energy diversification needs as it moves to ease its dependence on Russia as an energy supplier. Nabucco would travel some 1,900 miles from the Caspian region through Turkey to European energy markets. Gaul said energy security in the region was a top priority for NATO as energy demand increases, the Azerbaijan Business Center reports. "In the future, by 2013 our energy needs are going to increase by 50 percent and that will create additional difficulties in the area of safety and the environment," he said. Nabucco officials say signing of intergovernmental agreements is scheduled for June 25.

PORTO CERVO, June 10 (Reuters by Stephen Jewkes) - The South Stream gas pipeline that will transport Russian gas into Europe will have no funding difficulties and will be operative by the end of 2015, Gazprom Chief Executive Alexei Miller said on Wednesday. "The current capex plans will be honoured 100 percent. There are no problems whatsoever in funding it," Miller said, speaking to reporters on the sidelines of a conference. South Stream, which will have a capacity of 63 billion cubic metres per year, will be built by Gazprom and Italy's Eni and will cross the Black Sea to reach Bulgaria, Greece, Serbia, Hungary, Italy and possibly Austria. "It is not competing with the Nabucco project," he said, adding the feasibility study for the project will be decided by mid-2010. Nabucco is a rival pipeline project backed by the European Union. Miller said that a figure had already been set for the amount of gas Eni will be able to sell in the transit countries of South Stream but refused to give the number. Miller also commented on problems with supply of gas from Ukraine and Turkmenistan. Miller said Ukraine can and should pay for the gas it receives. He acknowledged Ukraine had paid for its May gas imports, adding payment had come from reserves of the Ukraine central bank, "an unorthodox solution", he said. Moscow cut supplies to Ukraine, and later to Europe, in January during a three-week stand-off over Ukraine state energy company Naftogaz's debts and the price of gas. He said Ukraine now needed to pump in some 19.5 billion cubic metres of gas to replenish its storage sites which will cost around $4.2 billion, adding that Ukraine's daily gas offtake fell sharply this week from last week. "I will have a meeting with the Naftogaz head next week to see what's happening," he said. Miller said he hoped the European Union summit on June 18-19 would discuss the creation of a joint EU-Russian consortium to help fund EU gas supplies. Asked when and under what terms Gazprom would restart Turkmenistan gas purchases, Miller said: "I intend to visit Turkmenistan in the next few days to discuss the gas situation". Turkmenistan and Russia have been in talks since April over how to resume the flow of gas after it was severed by a gas pipeline explosion, which Turkmenistan says Russia caused. Miller said that there is more gas than necessary in Europe today, adding no shortages are foreseeable in the short or long term. He said only 5 percent of reserves in the Arctic offshore fields have been explored. Development of the giant Shtokman gas field, which has estimated reserves of 3.7 trillion cubic metres, has not been delayed, Miller said, adding "an investment decision will be taken by March 2010". The North Stream pipeline project was also on schedule and will be commissioned in 2011. "It's a very important project and the cheapest export corridor for Russian gas," he said. North Stream is planned to link Germany and Russia via the Baltic Sea. Asked about Gazprom's interest in Slovenia's Petrol company, Miller said no decision had been taken yet. "We have received an offer (to buy) it," he said.

UNECHA, June 10, 2009 (RIA Novosti) - Russia's oil pipeline monopoly launched on Wednesday the construction of the second stage of the Baltic Pipeline System, designed to diversify the country's oil exports. The official ceremony of welding the first joint of pipeline was held in the Bryansk region in western Russia. The ceremony was attended by Russian Deputy Prime Minister Igor Sechin, Transneft CEO Nikolai Tokarev, Energy Minister Sergei Shmatko and regional administration officials. The Baltic Pipeline System-2, with an estimated cost of 120-130 billion rubles ($3.9-4.2 billion), will run from the Bryansk Region to the northwest Leningrad Region port of Ust-Luga with a branch going to the Kirishi oil refinery. The project will be funded through long-term ruble-denominated bond issues by pipeline monopoly Transneft. The bonds will be placed through a private offering among state-controlled financial organizations. The construction of the BPS-2 is to be completed two years later. Oil will start to be transported in late 2012 with an initial throughput capacity of up to 30 million metric tons (220 million bbl), which will subsequently be raised to 50 million tons per year (367 million bbl). The first stage of the Baltic Pipeline System, with a capacity of 12 million tons of oil annually and designed to transport oil from both Russia's oil-rich regions and Kazakhstan, was commissioned in 2001. Its current capacity is 75 million tons. The BPS-2 project emerged during an oil dispute between Russia and Belarus in January 2007, when Russia cut off supplies to Europe for four days via the Druzhba pipeline after Belarus refused to let Russian oil pass through the country without payment of a transit duty.

06-05-2009 - Upstream OnLine - UK oil major BP yesterday called on Russia to remove investment barriers to increase energy production and voiced support for a new gas pipeline under the Baltic. "There is wide agreement today that protectionism in all forms, be it in trade or in inward investment, is short sighted and is not a remedy in times of economic distress," BP's Chief Executive Toni Hayward was reported as saying on The Guardian at Russia's Economic Forum. "These barriers will slow down overall investment in the sector. Russia's oil production has recently started to decline and the demand for Russia's gas potentially also outstrips available supply," said Hayward. "The threat is that, in an attempt to shelter domestic producers and employment from international competition, first the government starts to erect trade barriers, subsides to tariffs. "Next, other countries retaliate and before we know it we are spiraling out of control - this very process brought the global economy to its knees in the 1930s," said Hayward. Russia says its joint project with German and Dutch companies to build a pipeline under the Baltic Sea would help boost security as it would cut Moscow's reliance on transit states like Ukraine. Previous disputes between Russia and Ukraine have led to cuts across Europe and prompted many European politicians to call for the reliance on Russian gas to be reduced. But the Baltic Sea project was delayed due to ecological concerns in Baltic states. "One concrete example of this (Russia-EU energy partnership) is the Nord Stream pipeline," said Hayward in his first public support of the project. BP is not part of Nord Stream, which involves Russia's Gazprom, Germany's E.ON, BASF and Dutch Gasunie. "This critical linkage between Russian gas producers and European energy consumers will enhance energy security and ensure freer flows of gas to European markets. It is a real physical manifestation of greater economic integration between Russia and Europe," said Hayward. BP has a bumpy history of relations with Russian authorities and its partners in the TNK-BP joint venture.

June 01, 2009 - Deutsche Presse-Agentur by Clive Freeman - The economic crisis will not delay construction of a controversial undersea gas pipeline from Russia to Germany, according to a director of the Swiss-based Nord Stream concern promoting the project. But the financial situation may result in "dramatic changes" in the number of banks participating, says Dirk von Ameln. "More and more banks are lacking the large amounts of money we would like to borrow from them," he says. "Whereas a year ago the talk was of three, four, or possibly a maximum of five banks being involved with big packages, now it could be as many as 10 to 20." This did not mean there was a risk of the project being delayed, he adds, because "we have an agreement with our shareholders that they will provide us with shareholder loans should there be any delay in the bank financing." "We can go ahead. It's not the money we are lacking," he told journalists in Berlin. Work is set to begin in April 2010 on the 1,200-kilometer Nord Stream pipeline, which will run along the bottom of the Baltic Sea, mostly in Finnish waters, from Wyborg, west of St Petersburg, to Lubmin, near Greifswald in Germany. When finished, it will have a 27.5 billion cubic meter gas capacity. Work on the second leg of the project is expected to start in 2013. The German government's attitude towards the project remains "very, very positive," says von Ameln. "But he cautions that the Nord Stream pipeline alone will not answer Europe's growing energy needs. Additional gas pipelines would have to be built, he says. One is a South Stream pipeline that will lead to more Russian gas being transported across Europe via Bulgaria to Italy by 2013. Russia's Gazprom and Italy's Eni will be the builders. This project foresees a 900-kilometer pipeline crossing the Black Sea, from Beregovaya on the Russian coast, to Varna in Bulgaria, and reaching a maximum water depth of 2,000 meters. Early last year Russia and Serbia announced the setting up of a joint company when signing the South Stream agreement, which allows for the pipeline to pass through Serbia. The plans provide for a large gas storage facility to be built near Banatski Dvor in Serbia. Russia and Hungary have a similar type arrangement in respect of the Hungarian section of the pipeline. Before stepping down as premier of Italy, Romano Prodi was asked by Gazprom if he would like to become chairman of South Stream AG, an offer he subsequently rejected, unlike former German chancellor Gerhard Schroeder, who readily accepted an offer to head Nord Stream when he was voted out of office. Critics of Nord Stream claim Europe might become dangerously dependent on Russian natural gas, particularly since Russia could face problems meeting a surge in domestic as well as foreign demand in the years ahead. But von Ameln discounts such theories, saying that by 2025 Europe will need to import 195 billion cubic meters more gas than it does today if it is to cope with increasing energy demands. "For 35 to 40 years we have had successful gas imports from Russia. These connections function," he stressed, adding "that the more the EU-Russia relations normalize the more people can view each other as good neighbors." Russia's Gazprom energy concern has a 51% stake in the venture and is in line for a windfall once the 7.4-billion-euro (10.3 billion dollars) Nord Stream project is realized. Seventy percent of the project finance is to be raised through loans this summer and another tranche 12 months later. The rest will be invested by the project's four shareholders, which include Germany's BASF and the Netherlands' Gasunie, in addition to Gazprom. Russia needs permits from five countries -- Finland, Sweden and Denmark among them -- through whose territorial waters the pipeline will pass. It is expected the necessary permission will be granted by the end of the year, despite environmental reservations in some of the northern countries concerned. The pipeline is destined to by-pass Ukraine, which earlier this year was involved in an energy dispute with Russia.

May 29, 2009 Eurasia Daily Monitor by Vladimir Socor - On May 17 in Sochi the Russian Prime Minister Vladimir Putin and his Turkish counterpart Recep Tayyp Erdogan concluded a deal on natural gas. Putin and Gazprom CEO Aleksei Miller promised to proceed with the Blue Stream Two gas pipeline project in a revised version through Turkey. Erdogan and Putin announced this in the wake of their meeting in Sochi (Hurriyet, Zaman, May 18). Blue Stream Two is envisaged as an overland prolongation of the existing Blue Stream One pipeline. Blue Stream One runs north-south from Russia directly to Turkey, on the seabed of the Black Sea. With a design capacity of 16 billion cubic meters (bcm) annually, Blue Stream One currently operates at half that capacity. The proposed Blue Stream Two, in its revised version, will continue across the Anatolian mainland into south-eastern Turkey. The original version of Blue Stream Two was intended to run the length of Anatolia westward, approximately on the same route as the Nabucco project from Turkey to Austria. In 2007, however, Russia abandoned that version of Blue Stream Two and pushed strongly for the South Stream project instead. South Stream will run east-west on the seabed of the Black Sea, from Russia directly to Bulgaria and onward to Europe. Designed to bypass the Ukrainian transit system and (unrelated to that goal) to forestall Nabucco, the South Stream project also pursues the lesser-known goal of bypassing Turkey, consistent with Russian policy to avoid transit routes that are not under its control. The Turkish AKP government has tried to bring Russia back to Blue Stream Two, even in a modified form whereby Gazprom might join Nabucco and use part of its capacity for deliveries of Russian gas (negating Nabucco's entire strategic rationale). However, Gazprom is not interested. Turkey dislikes the South Stream project for bypassing the country and depriving it of an opportunity to become an international energy hub. Ironically, Russia still needs Turkish consent to proceed with the South Stream project. Even if the pipeline circumvents Turkish territory, it is planned tentatively to run through Turkey's exclusive economic zone in the Black Sea. Thus, Ankara might procrastinate on this Russian project and seek a reward for its acceptance, having already demonstrated considerable capacity for stalling on Nabucco. Partly for this reason, Moscow is now returning to Blue Stream Two, albeit in a modified form. The basis for the revised Blue Stream Two is both commercial and political. Commercially, it will carry gas for consumption in Turkey and transport via its territory to gas-poor Middle Eastern countries, presumably from 2012 onward. Turkey's long-term agreement with Russia, signed with the USSR in 1986 for gas deliveries by pipeline via the Balkans (the "western route" from Turkey's vantage point), is due to expire in 2012 (Platts Commodity News, May 21). That gas travels across Ukraine before reaching the Balkans and Turkey. Hoping to bypass Ukraine, the Kremlin proposes to switch deliveries for Turkey, from the Balkan ("western") route toward the underwater Blue Stream One; and to supplement those volumes for transport further afield (primarily to Israel) -although declarations to that effect can hardly be taken at face value. As part of that vision, Turkey might become an international "hub," complete with gas storage capacities. Politically, Blue Stream Two will reward Turkey for cooperating with the Russian South Stream project. The promise of Blue Stream Two might facilitate Turkish consent to the Russian use of Turkey's exclusive economic zone in the Black Sea. That consent is indispensable to South Stream, since the only alternative is to build it in the Ukrainian exclusive economic zone in the Black Sea. A Russian underwater pipeline specifically intended to bypass Ukraine will be unlikely to receive Kyiv's consent (barring a Russian-orchestrated regime change in the country). The Ukrainian and Turkish exclusive economic zones are adjacent in the Black Sea, with no intermediate zone. To reach Bulgaria from Russia, the South Stream pipeline must run either through the Turkish zone or much of the Ukrainian zone and a small part of the Romanian zone. Moscow expects to secure Turkish consent and is trying to accelerate this through the promise of Blue Stream Two. Meanwhile, Moscow is building some counter-leverage to Turkey on that issue and is sounding out Romania. A Romanian delegation, headed by the Economics Minister Adriean Videanu (EDM, May 28, 29), was asked in Moscow recently to provide technical data relevant to pipeline construction on the seabed of the Black Sea within the Romanian exclusive economic zone. The Russian side also inquired about Gazprom conducting a study of the conditions on the seabed. Gazprom vice-president Aleksandr Medvedev -who alongside Energy Minister Sergei Shmatko took part in the talks- indicated that Moscow is considering laying an underwater section of the South Stream pipeline in the Romanian economic zone. The Romanian delegation agreed to hand over the technical data. Bucharest's official position is that it prefers and prioritizes Nabucco "at the present time" but does not rule out South Stream, if Nabucco fails to materialize (Agerpres, NewsIn, March 21; Radio Romania International, May 22; Rompres, May 26; Romania Libera, May 22, 25, 27). Laying a section of South Stream underwater in the Romanian zone might affect other Black Sea countries. It implies reducing the Bulgarian share in the overall volume of gas transported through South Stream. It has already signed the intergovernmental and project agreements with Russia and Gazprom respectively, for South Stream. Apparently, Moscow is not above playing with the idea of re-routing a portion of the gas earmarked for transport through Bulgaria under the project. Moscow's overture to Romania might create a non-Turkish option for laying the underwater pipeline. Moreover, (hypothetically the most intriguing consequence), using the Romanian zone will make sense if Gazprom decides to use the Ukrainian zone, instead of the Turkish zone for laying the South Stream pipeline. Indeed the shortest and comparatively shallowest, underwater route from Russia runs through the Ukrainian and Romanian maritime zones, which are adjacent to each other. All this maneuvering remains abstract, however, in the absence of Russian-dedicated volumes of gas. The Russian side claims to be able to supply both the South Stream and the Blue Stream Two pipeline projects at their declared capacities: South Stream at 63 bcm annually from 2015 onward (double the figure projected last year for 2013) and Blue Stream Two at 16 bcm annually, presumably from 2012 onward. The Russian stagnant gas production and looming shortfalls, however, invalidate such claims. No Black Sea country can count on the implementation of South Stream. They will all maneuver around each to secure Russian favor in connection with this project.

May 29, 2009 (RIA Novosti) - PARIS, Turkmenistan has been forced to halt gas production at 195 wells following an accident along a stretch of pipeline leading to Russia, a Turkmen expert said on Friday. The problem with Turkmen gas deliveries began in early April, when a blast and ensuing fire caused Turkmengaz, the country's state-run gas company, to suspend supplies to Russia. Odek Odekov, director of the geological institute at the state oil and gas exploration corporation Turkmengeologiya, said that repairs had already been carried out to the pipeline, which was ready to pump gas, adding that the resumption in supplies was subject to commercial negotiations. "If the parties come to terms, we won't file a suit with an international arbitration tribunal. The parties are currently unable to agree who is at fault," he said. Turkmenistan earlier accused Russia of failing to warn Ashgabat that it was reducing gas imports, resulting in a buildup of pipeline pressure that caused the blast. In turn, Dovlet Atabayev, head of the European office of the state agency for hydrocarbon resources management and use under the Turkmen president, said that a working group had been set up to look into the reasons for the accident. "This is a purely commercial issue between the parties and there is no political context to it. The experts have to find the cause," he said. Odekov said that some gas was still flowing into Russia but declined to specify the volume. He added that the agreement contained a force majeure provision but any reduction in gas supplies required each side to notify the other three days in advance. However, the Russian side gave Turkmenistan just one day advance notice, in effect creating a vacuum bomb, he said. Experts earlier attributed the significant reduction in gas imported by Russian energy giant Gazprom from Turkmenistan to a drop in demand from European consumers amid the ongoing global economic crisis. Russian President Dmitry Medvedev said in mid-May that the issue of resuming supplies depended on the Turkmen side.

May 28, 2009 (UPI) - NIS, Serbia, Administrators in the Serbian city of Nis called on government officials to pledge the route for the South Stream gas pipeline will not bypass their region. Officials from Russian gas monopoly Gazprom signed a series of bilateral agreements at a May 15 energy summit in the Black Sea resort town of Sochi on the proposed pipeline. Gazprom and its Serbian counterpart, Srbijagas, agreed on the terms of a joint venture for export design, construction and operational components of the South Stream leg through Serbian territory, with Gazprom holding the 51 percent majority. Dusan Bajatovic, the general director at Srbijagas, said the 280-mile leg of South Stream through Serbia will enter the country near the eastern city of Zajecar to Belgrade before branching off into northern and southern arteries. Opposition parties walked out of a city assembly meeting in protest of a decision to construct South Stream through Zajecar instead of Dimitrovgrad as originally planned, the Serbian broadcaster B92 reports. Administrators complained their region was neglected historically and local officials eventually adopted a declaration calling on Belgrade to reverse its decision regarding southern Serbia.