Friday, October 31, 2008

Russia's Gazprom courts Romania ahead of elections

By Valentina Pop for Southeast European Times in Bucharest – 30/10/08

Romania's natural-gas politics are heating up a month before the general elections. On Wednesday (October 29th), a delegation from the Russian gas giant Gazprom met with officials of Romania's Transgaz in Bucharest. Besides storage facilities and imports of Russian natural gas, they discussed "the creation of new transit capacities on Romanian territory" -- an allusion to possibly routing South Stream through Romania. The two sides agreed to meet again in December.

Economics and Finance Minister Varujan Vosganian announced on October 23rd that if invited, Romania will join Gazprom's South Stream project. Experts consider South Stream a rival of the US-EU-backed Nabucco pipeline -- up to now Romania's clear choice in terms of energy diversification.

Vosganian's announcement is at odds with President Traian Basescu's position: strongly backing Nabucco and rejecting South Stream in order to reduce dependence on Russian energy supplies.

This is not the first rift between Basescu and the ruling National Liberal Party (PNL). In June 2006, both Prime Minister Calin Popescu Tariceanu and then-Defence Minister Teodor Atanasiu announced Romania would pull out of Iraq. The announcement led to nothing except Atanasiu's sacking.

On the energy front, though, the PNL might prove more successful. It is banking on public outrage over rising gas prices, which the Socialist opposition portrays as the consequence of Basescu's confrontational policies towards Russia.

As Jamestown Foundation analyst Vladimir Socor points out, "Gazprom has skillfully chosen the timing of its move to pry Romania away from the Nabucco project," one month ahead of elections.

The EU has been reluctant to portray South Stream as a competitor of Nabucco, instead saying the two are "complementary". Yet both pipelines would draw from the same Caspian reserves.

Another effect of the Gazprom overture towards Bucharest is the enhanced Russian ability to extract concessions from countries that already signed up for South Stream, especially Romania's southern neighbour, Bulgaria. The latter wants to own the segment of South Stream expected to transit its territory.

Transgaz CEO Ioan Rusu portrayed Romania as better suited than Bulgaria to host South Stream because it would not request ownership of its pipeline segment. He said Transgaz would be content to operate the Romanian section and reap transit revenues.

Despite Bulgarian expressions of confidence that construction of South Stream will follow the original agreement, "Moscow is now using Bucharest to pressure Sofia to relent on the issue of pipeline ownership," Socor writes.

Gazprom's official line is that it has not ruled out Romania as a replacement for Bulgaria, NewsIn reports.

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