Putin endorses new pipeline for Europe (Jun 26, 2007)

Jun 26, 2007 (Romania Report & sources)

On Sunday, in Zagreb, the Russian President Vladimir Putin urged the Balkan countries of South-Eastern Europe to trust Russia as a reliable energy supplier, as he outlined plans for a major new gas pipeline through the region. The project downgrades Turkey’s ambitions to become a major energy hub and also circumvents the pro-U.S. Romania.

Putin made his appeal at a meeting with the leaders of eight Balkan countries in the Croatian capital Zagreb hosted by Croatian counterpart Stipe Mesic.

He particularly hailed a new project unveiled on Saturday to build a gas pipeline under the Black Sea from Russia to Bulgaria and then build branches to Austria and Italy.

But there were signs of dissent among the leaders, notably Romania's pro-Western President Traian Basescu, who made a veiled reference to claims Russia has used its vast energy resources as an instrument of political pressure.

Addressing the presidents of Albania, Bosnia, Bulgaria, Croatia, Macedonia, Montenegro, Romania and Serbia, Putin said it was essential to "strengthen mutual trust" between Moscow and the Balkan countries with regard to energy.


Putin Offers to ‘help’ Balkans on Energy

President Vladimir Putin pledged to help the Balkan region meet its energy needs and assume a greater role in the safe supply of oil and gas to mainstream Europe, The Associated Press reports.

Speaking at a one-day energy conference in Zagreb, Putin said Russia was prepared to help develop local infrastructure and boost cooperation over the oil and gas that passes through the region’s nations en route to the European Union.

“Russia is a world-leading factor in energy supply,” Putin told a news conference, adding that Moscow was committed to international agreements in the energy field, including “investment, cooperation and interaction with the Balkans.”

Putin listed projects or studies under way linking energy sources from the Black Sea and Caspian Sea to the EU through Bulgaria, Serbia, Macedonia and Hungary, as well as a Black Sea pipeline deal announced Saturday between Italy’s Eni and Gazprom.

“Russia is committed to participation in joint energy projects and meeting the highest environmental standards,” Putin said, adding that Moscow “is open to dialogue, but also ready to protect its national interests.”

Croatian President Stipe Mesic said that countries in the region were “an important hub of energy routes and have all the potential to develop into an even more important hub in the future.”

“We can only achieve this through mutual cooperation in the region,” he added.

The EU imports more than 40 percent of its natural gas, and almost half of this comes from Russia. Some central and eastern European countries depend almost entirely on Russian gas.

Leaders from Albania, Bulgaria, Bosnia, Greece, Macedonia, Serbia, Slovenia, Romania and Montenegro also took part in the talks, on issues ranging from the diversification of energy sources and its secure transport to market deregulation, environmental concerns and privatization.

Several countries in the region are collaborating on energy projects designed to diversify gas sources and reduce their dependence on Russia. Earlier this year, Croatia and Hungary agreed to strengthen cooperation in developing a liquefied petroleum gas terminal on the Croatian coast.

The terminal is scheduled to begin distributing gas from mostly North Africa and the Middle East to central Europe as of 2012.

Signaling Russia’s efforts to reassert its presence in the Balkans, Putin expressed interest in expanding capital investments, power networks and pipelines. He also supported the idea of an “energy ring” in the Black Sea region, which he said could help outline the parameters of a common power grid in Europe.

Putin was also expected to touch on Serbia’s breakaway province of Kosovo and other international issues during bilateral talks on the sidelines.


Romania’s President Traian Basescu slammed the Russian blackmail in the energy sector

As all Mr. Putin’s projects would bypass Romania (obviously because the country’s close military ties with U.S.), President Basescu, in his turn, backed the EU strategy in the energy sector. Notably, Romania's pro-Western President Traian Basescu made a veiled reference to claims Russia has used its vast energy resources as an instrument of political pressure.

“We all have to accept that the oil and gas are commodities – even if strategic ones – but we shall never accept the idea of using energy to instrument political pressure,” Mr. Basescu said. Undisclosed sources said that this peculiar remark was included into president Basescu’s speech following Mr. Putin’s official address to the audience.

Mr. Basescu pleaded for an energy market that enhances free competition, transparency, and nondiscrimination. “The approach we have in the relationships with Russia should include such elements,” President Basescu opined.

He reiterated the alternative solutions of “Nabucco” gas pipeline and the “Constanta-Trieste” oil pipeline -- projects backed by the EU member states’ aiming to reduce reliance on Russian energy resources.

According to press agencies, President Vladimir Putin met all the head of states who attended the meeting in Zagreb with one exception – i.e. Romania’s president Traian Basescu.


Turkey worried by Gazprom-Eni deal, official says

From Istanbul, Reuters reported on Monday that a Turkish energy official said the plan by Gazprom and Italian company Eni for a pipeline taking Russian gas to Western Europe threatens the “Nabucco” scheme that would link Caspian fields to Europe via Turkey.

But Greek Prime Minister Costas Karamanlis told reporters after meeting Russian President Vladimir Putin at a meeting of Black Sea countries in Istanbul that the "South Stream" pipeline would complement, not replace, other projects.

The decision to build the link under the Black Sea (i.e. the “Blue Stream”) raises the possibility that Russian gas export monopoly Gazprom will not join the 4.6 billion euro ($6.19 billion) Nabucco project, led by Austria.

A series of deals Russia has signed this year also threatens Turkey's goal to become a major transit point or hub for energy supplies from the oil and gas rich Caspian and Central Asian regions to the European Union.

"The natural gas and petroleum projects suggested by Russia since the start of the year hurt the projects in which Turkey is involved, even though (Turkey) does not want to accept this," the Turkish Energy Ministry official told Reuters.

The 900 km (560 miles) "South Stream" unveiled by Gazprom and Eni on Saturday would come ashore in Bulgaria, then branch to Austria and Slovenia in one spur and southern Italy in another.

"Other parties likely to be less happy about this announcement are European regulators concerned about potential Russian dominance in gas supplies to Europe," Citigroup said in a research note.

Karamanlis took a different view of the issue.

"This is a very important project which will contribute to both energy security and diversification," he told reporters after meeting Putin on the fringes of the Black Sea Economic Cooperation Organisation meeting. "Greece is ready to join it."

"Combined with the Burgas-Alexandropoulis pipeline and the one that goes through Turkey, it will turn the region into a new hub for distribution of energy," Karamanlis added.

Russia, Greece and Bulgaria earlier this year agreed on a new oil pipeline linking the Bulgarian Black Sea port of Bourgas to the Greek port of Alexandropoulis in the northern Aegean.


COMMISSION SAYS PLAN IS POSITIVE

The European Commission also said it did not see the project as a competitor to Nabucco, saying any new infrastructure was helpful to secure energy supplies for the 27-nation bloc.

"We see no opposition between the two projects. Any infrastructure that can match this demand is seen as a positive development by the Commission," a spokesman for the European Union executive said."

Putin said the "South Stream" as well as "Northern Stream" pipeline, which will run from Russia to Europe under the Baltic Sea, was in the interests of European consumers.

"These are new projects for new contracts," he told reporters. "They allow us to reach consumers in Europe directly."

Several European countries and Turkey launched “Nabucco” in an attempt to reduce reliance on Russian natural gas.

Gazprom was later urged to join in recognition that it might be difficult for the project to succeed without Moscow's gas.

“Nabucco” would pump gas from Iran, Iraq, the Caspian and hopefully Russia via Bulgaria, Romania and Hungary to Austria.

“Nabucco” has already been criticised for delays and the lack of a convincing timetable as well as apparent wavering among some countries involved in the project, especially Hungary.

State-controlled Gazprom's chief spokesman Sergei Kupriyanov said on Saturday his company would continue to work with Turkey on plans to supply gas across Turkey and onwards to Israel through the "Blue Stream".

But he declined to say where that would leave the idea of expanding Blue Stream to south-eastern Europe.


Putin’s new pipeline: what’s the catch for Russia?

On Monday, Financial Times commented that the Russian President Vladimir Putin has gone of out his way to emphasise how plans for a new €10bn (£6.7bn, $13.5bn) South-East European gas pipeline will benefit European consumers.

“Russia as a global leader in oil and gas production is ready to do everything possible to resolve energy problems in the region,” he told a meeting of 10 Balkan leaders in Croatia, soon after the new gas project had been announced by Gazprom, the Russian gas group, and Eni, the Italian energy concern.

Mr Putin was less forthcoming on how Russia could profit from the ambitious scheme. But it is clear the Kremlin hopes for political as much as commercial benefits. Indeed, the scheme is hard to justify on financial grounds alone. The “South Stream” route would run up to 3,200km from southern Russia, under the Black Sea to Bulgaria – from where it could take either, or both, of two directions: one across Greece and the Adriatic to southern Italy and the other across the Balkans to northern Italy.

All these countries could be supplied more cheaply by expanding existing routes, notably the Blue Stream route under the Black Sea from Russia to Turkey or the old-established Soyuz pipeline, still the largest east-west gas route, which crosses Ukraine.

Professor Jonathan Stern, head of gas research at the Oxford Institute for Energy Studies, says: “It’s hugely expensive. As soon as they do the real numbers about what it costs they might think again.”

However, Gazprom is determined to reduce its reliance on East-European transit countries in accessing European Union markets. South Stream follows the controversial Nord Stream project, which is planned to link Russia and Germany via the Baltic Sea, circumventing the Baltic states and Poland. South Stream would allow Russia to supply south-east Europe without using the Ukrainian pipeline, or depending on Turkey to develop new routes connected to Blue Stream, and also circumventing the pro-U.S. Romania.

The Nord Stream project has run into hostility in Poland amid concerns that it will divert gas away from Polish transit pipelines, including a new pipeline from Yamal in west Siberia to Europe.

Russia is unlikely to run into the same difficulties in south-east Europe. Moscow is a traditional ally of Christian Orthodox states, including Serbia, Bulgaria and Greece (Romania excepted).

Welcoming South Stream, the European Commission says: “Security of supply is not only having new suppliers. It is also having new supply routes.”

Among the Balkan leaders who met Mr Putin this weekend, only Romania’s President Trajan Basescu struck a negative note and called for less dependence on Russian gas.


Putin at the Black Sea summit: “Russia is back”

ISTANBUL -- Russia is back in the Balkans and around the Black Sea, President Vladimir Putin told a regional meeting on Monday as delegates agreed to increase cooperation in energy and trade, AFP reports.

"Everybody knows that the Balkans and the Black Sea region were of special interest to us," Putin told reporters at the end of a summit of the Organisation of the Black Sea Economic Cooperation (BSEC).

"Russia, with its increasing potentials, is coming back to this region. This is an obvious fact," he said. "This is in the interest of Russia but also of our partners."

Following the disintegration of the Soviet Union in the 1990s, Russia's influence in the Balkans, for decades a communist stronghold, and in the Black Sea region, diminished. Anyway, Russia never undertook an actual large scale experience with the ‘gunpowder barrel’ of the Balkan region

Putin was among 12 leaders who held talks in Istanbul Monday on ways of boosting trade and energy cooperation in the area.

A joint declaration issued at the end of the summit acknowledged that political problems between member states were hindering economic exchange in the oil-rich region and called for their peaceful settlement.

The member countries were ready "to deepen cooperation in the area of energy ... and cooperate with the European Union and other international partners to ensure fair access to energy resources and markets on a mutual basis for all interested countries," it said.

The region the BSEC covers is the world's second-largest source of oil and natural gas after the Gulf and is a major transit corridor for energy supplies bound for Europe.

Speaking at the meeting, Putin, whose country has been accused of using its oil and gas riches as a political weapon, called for "strengthening the stability of the energy markets of the Black Sea, also by expanding the practice of long-term contracts."

He said Russia favoured "the diversification of energy supply routes, the creation of new insurance schemes and the share of financial risk between partners through the exchange of shares."

The BSEC, which celebrated its 15th anniversary Monday, comprises the Black Sea littoral states -- Bulgaria, Georgia, Romania, Russia, Turkey and Ukraine -- as well as Albania, Armenia, Azerbaijan, Greece, Moldova and Serbia.

The members pledged to speed up work on upgrading transport infrastructure, including a projected 7,500-kilometre (4,660-mile) ring road along the Black Sea coast and regular maritime links between their ports, with the aim of boosting tourism and trade.

Removing trade barriers was another priority, and they called for closer cooperation with the EU and for the "earliest" settlement of political tensions and territorial conflicts between member states.

"Political conflicts constitute an important hurdle in the way of economic cooperation and development," Turkish Prime Minister Recep Tayyip Erdogan said at a lunch he hosted at the summit. "We have to make efforts to find a solution to political problems by ourselves within the region," he added.

Romania’s President Traian Basescu praised the EC “Black Sea Synergy” approach as well as the EU proposed financial support for the region. Mr. Basescu also said that Romania – as a NATO and EU member state – would further resolutely act as a security provider in the Black Sea wider area. President Basescu reiterated the idea that there is a need for an increased energy security as well as a border security for the countries in the region, as stated at the GUAM summit, in Baku on June 18-19, 2007.

Turkish Foreign Minister Abdullah Gul held a rare bilateral meeting with Vardan Oskanian, his counterpart from arch-foe Armenia, with which Turkey has no diplomatic ties.

Armenia was the only country to be represented by a foreign minister. All other nations sent presidents or prime ministers.


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The BSEC was established in 1992 to promote stability and economic ties between nations that belonged to opposite camps during the Cold War.

It covers nearly 20 million square kilometres (7.7 million square miles) with a population of 350 million people. Member states have a total foreign trade volume of 300 billion dollars (223.5 billion euros) a year.



Romania Report & sources