Head of Gazprom: The Role of Ukraine as a Gas Transporter Will Go Down to Zero - Fort Russ

"Nord Stream" and a Turkey pipeline will make the transit of gas through Ukraine meaningless, announced the head of Gazprom Alexey Miller in an interview to the TV program "Vesti on Saturday with Sergey Brilev": "Yes, in fact, the role of Ukraine as a transit country is reduced to zero," - said Miller.

"The decision to stop the "South Stream" is a beginning of the end of our business model, when we focused on the delivery to a final consumer in the European market."

At the same time, he noted that Russia will supply Ukraine with all its gas needs for domestic consumption. "In fact, we will provide the amount that Ukraine needs for its domestic consumption. Deliveries to Europe will be made by alternative routes,"- said Miller.

At the same time, he stressed that the cancellation of "South Stream" is not associated with the requirements of the Eurocommission's third energy package. "The decision to shut down "South Stream" was adopted in the framework of the visit of our President to Turkey, but on this very day the pipelaying ship went out in the Black Sea in order to carry out work on laying the pipeline. But how can we proceed with this work, when Bulgaria did not even give permission to build in the territorial waters, in the special economic zone, and have not issued a construction permit to build on land... This issue has nothing to do with the third energy package," - explained Miller.

Complete story at - Head of Gazprom: The Role of Ukraine as a Gas Transporter Will Go Down to Zero - Fort Russ

Fort Russ: The death of South Stream - maidan in Turkey or government collapse in Bulgaria?

Yurasumy - Live Journal

Yesterday was eventful with statements. The energy sector perhaps most important:

"Given the fact that we still have not received permission from Bulgaria, we believe that Russia cannot continue the implementation of this project on these terms," - said Putin, stressing that to start a project without permission from one of the countries "is ridiculous".

"Are we going to invest hundreds of billions of dollars, go through the entire Black Sea and stop before the Bulgarian border?" - he said to journalists. "Therefore we will not implement it" - he concluded.

"This is not consistent with the economic interests of Europe and unfortunately undermines our cooperation, " - the President said. "But that is the choice of our European friends".

"But in the end they are the buyers, and it is their choice," - said Putin, calling the EU's position unconstructive. "If Europe does not want to implement the project, then it will not be implemented," - he said, stressing that everything was ready for South Stream from Russia's side.

In this regard, Putin advised Bulgaria, which is blocking the project, to demand from the EU a compensation for lost profits. "If Bulgaria is denied the opportunity to behave as a sovereign state, they should at least require money for lost profits from the Commission, because just direct transit revenues for Bulgaria would have been 400 million euros per year," - he explained.

"Ultimately, this is also the choice of our Bulgarian partners they probably have some obligations, but it's not our business, and the work of our partners," - added Putin.

Complete story at - Fort Russ: The death of South Stream - maidan in Turkey or government collapse in Bulgaria?

Fort Russ: "We turned out to be the same stupid prostitutes as the poles" - outrage and anger on Bulgarian forums

NoBC4U Note: So, Russia decides to cancel South Stream because the EU continues to delay and put up barriers to it's construction.  And what country gets hurt the most?  Bulgaria.  One of the poorest countries in the EU.  But don't fret Bulgaria.  Should Ukraine ever qualify for EU membership (doubtful), Ukraine will take over the bottom rung on the poorest of the poor in the EU ladder.

Krasavchik - Live Journal

I decided to read the comments on Bulgarian information resources. You can feel for our Bulgarian brothers. Translated a couple dozen of them. The vast majority of the comments, of course were written in the following spirit:

* * *
Yes, something happened, what I was talking about a long time ago - the South Stream will pass through the territory of the country, which is a more reliable partner than we are! Well, we're a wealthy country, for us 400 million euros... is nothing. We will not even ask for compensation from the EU, you can be sure!
* * *
God, what idiots are in charge right now!
* * *
Are you Bulgarians or are you stupid? We had to fight!!!
* * *
It's very simple. To this point we were led by greedy Prime Minister with BSP party. It is a national disaster!

* * *
BSP, ABV, ATTACK, organize protests in front of the Presidential Palace, the Parliament, in order to prove to them that we are a civil society and not paid sorosoids!
* * *
In a year we will buy Russian gas from Turkey and Greece, only with commission to the Turks and the Byzantines.

Complete story at - Fort Russ: "We turned out to be the same stupid prostitutes as the poles" - outrage and anger on Bulgarian forums

EU to accept South Stream if compliant with legislation,says Bulgaria

The South Stream project would've been easily accepted if the project was compliant with existing European legislation, said the President of Bulgaria on Tuesday.

“The countries which show an interest in the implementation of South Stream did a lot of preparatory work and authorized the European Commission to hold talks with the Russian leadership so that a decision on the project can be reached. The decision is entirely in the hands of Russia and the European Union,” Rosen Plevneliev said on Tuesday, commenting on the Russian decision to shelve the South Stream project.

Russia’s President Vladimir Putin blamed Bulgaria on Monday evening, saying that Moscow is taking a step back because of Bulgaria’s delay in granting permission for the pipeline.

“I mean that we now need to start the construction of this pipeline in the Black Sea, but we cannot do that until we have Bulgaria’s permission. I think it’s clear to everyone that it would be ridiculous to start the construction in the sea, reach the Bulgarian shore and stop” Putin said on Monday, during a joint press conference with Turkey’s President Tayyip Erdogan.

Putin also spoke about the European Commission, adding that Sofia should ask for compensation from Brussels.

“If Bulgaria is deprived of the opportunity to act as a sovereign nation, then they should at least demand money from the European Commission to compensate for their lost profits, because direct revenues to Bulgaria’s budget alone would have been no less than 400 million euro a year.”

Complete story at - EU to accept South Stream if compliant with legislation,says Bulgaria

The Vineyard of the Saker: The Importance Of The Cancellation Of South Stream

by Alexander Mercouris

The reaction to the cancellation of the Sound Stream project has been a wonder to behold and needs to be explained very carefully.

In order to understand what has happened it is first necessary to go back to the way Russian-European relations were developing in the 1990s.

Briefly, at that period, the assumption was that Russia would become the great supplier of energy and raw materials to Europe. This was the period of Europe's great “rush for gas” as the Europeans looked forward to unlimited and unending Russian supplies. It was the increase in the role of Russian gas in the European energy mix which made it possible for Europe to run down its coal industry and cut its carbon emissions and bully and lecture everyone else to do the same.

However the Europeans did not envisage that Russia would just supply them with energy. Rather they always supposed this energy would be extracted for them in Russia by Western energy companies. This after all is the pattern in most of the developing world. The EU calls this “energy security” - a euphemism for the extraction of energy in other countries by its own companies under its own control.

It never happened that way. Though the Russian oil industry was privatised it mostly remained in Russian hands. After Putin came to power in 2000 the trend towards privatisation in the oil industry was reversed. One of the major reasons for western anger at the arrest of Khodorkovsky and the closure of Yukos and the transfer of its assets to the state oil company Rosneft was precisely because is reversed this trend of privatisation in the oil industry.

In the gas industry the process of privatisation never really got started. Gas export continued to be controlled by Gazprom, maintaining its position as a state owned monopoly gas exporter. Since Putin came to power Gazprom’s position as a state owned Russian monopoly has been made fully secure.

Much of the anger that exists in the west towards Putin can be explained by European and western resentment at his refusal and that of the Russian government to the break up of Russia's energy monopolies and to the “opening up” (as it is euphemistically called) of the Russian energy industry to the advantage of western companies. Many of the allegations of corruption that are routinely made against Putin personally are intended to insinuate that he opposes the “opening up” of the Russian energy industry and the break up and privatisation of Gazprom and Rosneft because he has a personal stake in them (in the case of Gazprom, that he is actually its owner). If one examines in detail the specific allegations of corruption made against Putin (as I have done) this quickly becomes obvious.

Complete story at - The Vineyard of the Saker: The Importance Of The Cancellation Of South Stream

Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead | Zero Hedge

In retrospect, it should have been obvious in August.

Back then we wrote that the EU's poorest member nation, Bulgaria, had been an enthusiastic supporter of the Russian-backed South Stream gas pipeline project, whose construction has stoked tensions between the West and Moscow as it enabled gas supply to bypass troubled Ukraine (thus squeezing the desparate economy back into Russia's hands). In early June, Bulgaria's Prime Minister Plamen Oresharski ordered an initial halt (after Europe offered the nation's suddenly collapsing banking system a lifeline). Subsequently, Energy Minister Vasil Shtonov has ordered Bulgaria’s Energy Holding to halt any actions in regards of the project as it does not meet the requirements of the European Commission.



And then, just to send Putin a very clear message where the allegiances of this former Soviet satellite nation lie, NATO deployed 12 F-15s and 180 troops to Bulgaria's Graf Ignatievo Air Base.

A dozen F-15s and approximately 180 personnel from the 493rd, based at RAF Lakenheath, England, have deployed to Graf Ignatievo Air Base to participate in a two-week bilateral training exercise with the Bulgarian air force, Pentagon spokesmen Col. Steve Warren told reporters Monday.

The exercise began Monday and will continue through Sept. 1.

The purpose of the deployment is to “conduct training and focus on maintain joint readiness while building interoperability,” Warren said.

The move comes at a time when America’s Eastern European partners and allies are concerned about Russian military intervention in Ukraine. There are fears that Moscow might try to destabilize other countries in the region.

“This is a reflection of our steadfast commitment to enhancing regional security,” Warren said about the exercise.

Complete story at - Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead | Zero Hedge

Russia and Turkey have agreed to build a new offshore gas pipeline

Gas dynamics in Europe have taken a surprise twist with announcement Monday that Russia and Turkey have agreed to build an offshore gas pipeline.

Gazprom’s head Alexey Miller said that a memorandum of understanding had been signed for the construction of an offshore gas pipeline to Turkey with the annual capacity of 63 billion cubic meters, the same volume as the proposed South Stream pipeline.

Speaking about South Stream, Miller said, "That’s all, the project is closed.

Earlier, Russian President Vladimir Putin had told a news conference that Russia would not continue the South Stream project “in the current conditions.”

"If Europe does not want to carry out (South Stream), then it will not be carried out," Putin said.

Complete story at - Russia and Turkey have agreed to build a new offshore gas pipeline

Hungary to start South Stream construction in 2015 despite Western pressure — RT Business

Hungary plans to break ground next year on its stretch of the South Stream pipeline to send natural gas from Russia to Europe. It is in defiance of EU and US calls to halt the project over frosty relations with Moscow.

One major reason Hungary has thrown its support into South Stream is the lack of a better option since the EU-backed Nabucco pipeline, which was supposed to deliver gas from Azerbaijan to Europe, failed.

"Nabucco will not be built and after nearly 10 years of hesitation, and especially in light of the Ukraine situation, we need to act. This is a necessity," Hungarian Energy Minister Andras Aradszki told Reuters.

Earlier Hungarian Prime Minister Viktor Orban said that Washington is putting pressure on Budapest for cooperating with Russia over energy.

READ MORE: Hungary under ‘great pressure’ from US over its energy deals with Russia

Gazprom’s $45 billion South Stream project will deliver about 64 billion cubic meters of gas to Europe, Russia’s biggest client, without unreliable passage through Ukraine.

Russia is Hungary's biggest source of natural gas, and in 2013 the country bought 6 billion cubic meters. Hungary hopes the pipeline will be complete by 2017.

Ministers from Russia also confirmed construction will begin in 2015.

Complete story at - Hungary to start South Stream construction in 2015 despite Western pressure — RT Business

Bulgaria Halts South Stream Pipeline Again As NATO F-15s, Troops Arrive | Zero Hedge

As we detailed previously, Bulgaria had been an enthusiastic supporter of the Russian-backed South Stream gas pipeline project, whose construction has stoked tensions between the West and Moscow as it enabled gas supply to bypass troubled Ukraine (thus squeezing the desparate economy back into Russia's hands). In early June, Bulgaria's Prime Minister Plamen Oresharski ordered an initial halt (after Europe offered the nation's suddenly collapsing banking system a lifeline). This time, Energy Minister Vasil Shtonov has ordered Bulgaria’s Energy Holding to halt any actions in regards of the project as it does not meet the requirements of the European Commission. Of course, we assume this decision (to halt a 2nd time) is entirely independent of NATO's deployment of 12 F-15s and 180 troops to Bulgaria's Graf Ignatievo Air Base.





As RT reports, all operations on Russia’s Gazprom-led project South Stream have been suspended, as they do not meet the requirements of the European Commission, Bulgaria’s Ministry of Economy and Energy said on its website.

“Minister of Economy and Energy Vasil Shtonov has ordered Bulgaria’s Energy Holding to halt any actions in regards of the project,” the ministry said. This specifically means entering into new contracts.

There has been mounting pressure from the EU to put the project on hold, and now the European Commission will be consulted each step of the way to make sure it complies with EU law.

European 'anti-monopoly' laws prohibits the same company to both own and operate the pipeline. However, Gazprom and Bulgaria had previously struck a bilateral agreement regarding that aspect of the project.

...

Bulgaria is the first country traversed by the pipeline on land, after a section that runs beneath the Black Sea from Russia.

Complete story at - Bulgaria Halts South Stream Pipeline Again As NATO F-15s, Troops Arrive | Zero Hedge

Gov't Allowed Start of South Stream Construction in Bulgaria - Novinite.com - Sofia News Agency

Bulgaria's former government granted South Stream the first building permit in end-July, the Regional Development Ministry's website reveals.

A document [BG] dating July 31 signed by former Regional Minister Desislava Terzieva shows the construction of a receiving terminal in the Pasha Dere area, near the Black Sea city of Varna and a compressor station.

The two facilities were given the green light despite Sofia's assurances that the project was frozen until a further decision from the EU Commission.

In the document handing out a construction permit, Terzieva points out that her ministry decided to approve "preliminary implementation" of the permit.

In her words, state and public interest would suffer if such a decision is delayed any further.

Complete story at - Gov't Allowed Start of South Stream Construction in Bulgaria - Novinite.com - Sofia News Agency

The Prospects for the South Stream Pipeline after the Ukrainian Crisis | Foreign Policy Journal

by Andrew Korybko | June 6, 2014

Map of the proposed South Stream natural gas transportation pipeline (Samuel Bailey/Wikimedia Commons)

Introduction

Following the end of the Cold War and the redistribution of power in the international system, soft power began to take on a significant role in geopolitics. Aside from its ideological and image-crafting manifestations, it is also deeply involved with the energy sector. Specifically, the complex energy interdependence between Russia and the EU has become a major factor in continental (and by degrees, global) politics. As with any interdependency, both sides are simultaneously vulnerable and empowered, setting the stage for unique tango-like moves of “give and take” between both political dancers. After dancing for so long, either partner may tire of the other and try to break free from the tango, eying an available replacement partner across the dance floor to enter into a different type of dance with.

It is against this thematic backdrop that Russia and the EU currently find themselves, especially when it comes to the subject of South Stream. The research will address the project and touch upon the EU’s legal mechanisms for influencing it. Following that, the article will explain the clash between Russia and the EU’s vision for the South Stream pipeline, taking into consideration Brussels’ legal tools. The effect of this Great Power competition on the Balkans will be explored, followed by the most recent developments stemming from the Ukraine Crisis. The latter, as a result of the EU’s reaction to it, will be considered a watershed event in energy relations with Russia, and two probable scenarios will be forecasted.

European Energy Geopolitics

The EU collectively receives about a third of its gas imports from Russia, with some members – Finland, the Baltic States, Slovakia, and Bulgaria – practically fully dependent[1] on Russia for their needs. On the reverse, Russia exports nearly 80 percent[2] of its oil and gas to the EU, and the energy trade contributes to nearly 70 percent of its total exports and 30 percent of its GDP.[3] Due to the Ukrainian Gas Crisis of 2009, when Russia stopped transit because Ukraine was illegally siphoning off gas[4] and hadn’t paid its debt, the EU experienced an acute energy shortage. Ukraine supplied 80 percent of Russian gas to Europe[5] at the time, and the lesson that the EU learned was that it needed to diversify its pipeline routes (and perhaps suppliers, as the failed Nabucco project[6] sought to do) to prevent a repeat of this scenario. The successful completion of Nord Stream in 2012 reduced Ukrainian transit dependence to 50-60 percent,[7] and the fulfillment of South Stream has the potential to lower that amount even further.

South Stream

South Stream is a Russian-led project to create a gas pipeline that travels under the Black Sea to the Balkans, and thenceforth into the heart of Europe. It would increase EU supplier dependency on Russia, while at the same time decreasing transit dependency on unstable Ukraine. The backbone of South Stream will pass through Bulgaria, Serbia, Hungary, and Slovenia, with extensions planned for Austria, Croatia, and Greece, all of which have already signed onshore agreements with Gazprom. Even before the Crimean climax of the Ukrainian Crisis, Brussels had taken issue with South Stream as a result of the Russian project not accommodating new EU energy regulations. This has led to the EU pressuring the aforementioned states to renegotiate their agreements with Gazprom or face stiff legal penalties.[8]

The EU’s Legal Mechanisms for Reverse Energy Blackmail

The EU has passed various legal packages in a bid to centralize the energy policy of all of its members. Although supposedly created to increase market competition and support energy efficiency, a dual purpose of the measures is to make the EU a unified energy partner in dealing with Russia, thereby allowing it to enact greater concessions and benefits.

Energy blackmail is usually identified with the supplier enforcing its political will on customers downstream, but in this case, the potential for reverse energy blackmail is apparent. This is defined as downstream states taking (or threatening to take) moves to limit their consumption, thereby endangering capital flow to the upstream state which has grown dependent on its customers. To a country as dependent on its downstream clientele for revenue as Russia is, this is a strategic threat. The subsequent sections describe the EU’s levers of reverse energy blackmail and how they affect Russia.

Complete story at - The Prospects for the South Stream Pipeline after the Ukrainian Crisis | Foreign Policy Journal