MOSCOW (Russia Today)—With the end of the South Stream pipeline project, Russia will have to adapt to a new market where it will no longer provide gas delivery to end users in Europe, Aleksey Miller, CEO of Russian gas giant Gazprom, said in an interview confirming the closure of the South Stream project.
Russia’s state-owned Gazprom has given up plans for its long-awaited South Stream gas pipeline to Europe after being unsuccessful in working around European Union laws that prohibit a single company from controlling the extraction, transportation, and sale of energy resources together.
Now Gazprom is going to use partially constructed South Stream infrastructure in Russian territory to build a new gas pipeline across the Black Sea to Turkey, with an annual capacity of 63 billion cubic meters.
“Our strategy towards the European [gas] market is undergoing fundamental changes. The decision to halt the South Stream marks the beginning of the end of our previous market model, when we aimed at ultimate customer delivery in Europe,” the head of Gazprom, Aleksey Miller, told Rossiya 1 Channel in an interview.
“Love cannot be forced,” Miller said. “If a customer doesn’t want doorstep delivery, then he apparently has to put on clothes and go shopping, and if it is winter time – he’ll have to bundle up and go out with any package he wants,” Miller said.
“Shopping” will now be done at the tie-in facility, which will be a trading platform on the Turkish-Greek border, indicated Miller. Unlike the South Stream, the new project does not fall under the EU’s anti-monopoly regulations.
South Stream ‘definitely over’
The head of Gazprom confirmed that the South Stream project is closed once and for all, blaming the EU for “openly blocking” the pipeline’s construction by allegedly prohibiting Bulgaria from constructing its part of the pipeline.
Sofia in June announced its refusal to allow the construction of the South Stream in Bulgaria, which would connect the pipeline to the rest of Europe. Russian officials attribute the decision to pressure from Brussels, who has shown opposition to the South Stream since relations with Moscow soured following the Ukranian crisis.
“The project has been stalled for six month now,” acknowledged Miller. “To say now that the ball is on the Russian side is nothing else but shifting the blame.”
Russia wasted years and “some money” promoting the South Stream project, yet acquired certain knowledge and experience, Miller said.
“Now we can say that we do know European bureaucracy very well. There’s no guarantee that the same [attitude] won’t recur in a month or two, or half a year’s time,” he added.
Turkey will now control ‘Europe’s gas valve’
The new gas contract with Gazprom endows Ankara with economic and political benefits, while Europe and primarily Bulgaria lost billions in investments, Miller contended.
More specifically, Miller argues that Bulgaria lost more than 6,000 new jobs and over $3 billion of investment, relinquishing a profitable status as a transit entity that promised the country a guaranteed annual income. All this now goes to Turkey, Miller says, together with all gas volumes being transported via Bulgaria right now.
Once the construction of the new pipeline is over – transit through Bulgaria will be discontinued, stressed Miller.
“The EU and the European Commission simply presented Turkey with a ‘gas valve’. I believe Turkey might use it in its dialogue with Europe. And we got a new strategic partner in the gas business,” the Gazprom CEO concluded, noting that as of year-end results Turkey is becoming the monopoly’s no. 2 partner in Europe, after Germany, which gets Russian gas via the exclusive Nord Stream pipeline.