Friday, October 24, 2008

Romania opens door to Gazprom pipeline

EUobserver.com

VALENTINA POP

Romania is open to investing in the Gazprom pipeline South Stream, not just the EU Nabucco project, designed to reduce energy dependency on Russia, Romanian minister of economy Varujan Vosganian said on Thursday, contrary to the president's statements.

A Gazprom delegation is expected in Bucharest next week, just a month ahead of general elections.

"Romania is ready to support any EU project, both Nabucco and South Stream," the liberal minister, whose party is at odds with the country's conservative President Traian Basescu, said, newswires report.

Only a day before, Mr Basescu renewed his calls on the European Commission and EU member states to "accelerate Nabucco," in order to decrease the EU's energy dependency on Russia.

The divergent remarks come a few days after Romanian gas officials went to Moscow, with Russian newspaper Kommersant claiming Gazprom is considering re-routing South Stream through Romania.

Gazprom chief executive Alexei Miller said in a statement on 17 October that the discussions were about "co-operation in underground gas storage ... developing the existing transit capacities, as well as creating new ones," Reuters reports.

A Gazprom delegation is expected in Bucharest next week, Romanian gas company Transgaz announced on Thursday (23 October).

Romania is the only one of the five Nabucco pipeline countries that has not yet signed up to South Stream or other projects with Gazprom.

Bulgaria and Hungary have both signed government agreements on joining South Stream. Austria is also in talks and has already agreed to sell Gazprom 50 percent of the shares in Baumgarten, the gas hub where Nabucco is supposed to end, while Turkey already operates a direct sub-marine pipeline linking it to Russia - Blue Stream.

Unlike Hungary and Bulgaria, which import over 85 percent of their gas from Russia, Romania gets only a third of its gas consumption from Gazprom, the rest being extracted internally.

Yet the Gazprom offer, combined with the issue of skyrocketing gas prices and the idea of improving Romanian-Russian relations, might find fruitful ground in the run up to the parliamentary elections on 30 November. Russian gas is currently imported at a price of €418 per thousand cubic meters, almost double that a year ago.

The social-democrat opposition has already called for "direct talks" with Moscow on gas prices and denounced Mr Basescu's "deep freeze" policy towards Russia as "irresponsible."

Gazprom: Divide and rule

"[Romania joining South Stream] would be against the principle of solidarity of the union and it would further undermine the Nabucco project," Jacek-Saryusz Wolski, head of the European Parliament's foreign affairs committee told Romanian news agency NewsIn.

"Poland was offered to join Nord Stream [a Gazprom prjeect iinthe Balti Sea] and refused. There are countries who think there should be solidarity and speaking with one voice and others who give up. Romania has to choose which camp it is in."

The EU has constantly maintained that South Stream is not a rival to Nabucco, but that they are "complementary."

Apart from distracting investors and suppliers for the Nabucco project, Gazprom is also playing different EU countries against each other, Vladimir Socor, a long-time expert of the Jamestown Foundation, writes in the Eurasian Daily Monitor.

"Gazprom is tempting the maximum possible number of countries, playing them off against each other with the prospect of individual package deals around South Stream."

"Package deals would include supply contracts, transit revenue, and storage sites that could confer on this or that recipient country the coveted status of a gas-trading 'hub.' Mostly aware of Gazprom's limited gas export potential in the years ahead, the countries are vying to wrap up supply contracts ahead of their neighbors and to make the most out of any possible transit and storage opportunities," he adds.

South Stream is a Russian-Italian joint venture which former Prime Minister Romano Prodi rejected to chair, unlike his German counterpart Gerhard Schroder for the Nord Stream pipeline on the seabed of the Baltic Sea. With execution costs almost double tose of Nabucco, South Stream's start has now been delayed by two years to 2015.

Its planned route would run from the Russian Black Sea coast across the seabed to Bulgaria, then bifurcate into a southern branch to Greece and southern Italy and a northern branch into Serbia, Hungary, and Austria, with a potential detour to Slovenia and northern Italy.

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