Putin scraps South Stream gas pipeline on Turkey visit

Putin scraps South Stream gas pipeline on Turkey visit

President Vladimir Putin on Monday unexpectedly announced Russia was shelving the multi-billion dollar South Stream pipeline project to deliver Russian gas to the Europe, blaming the EU for throwing obstacles in its path.

Putin revealed on a visit to Ankara that Russia was drawing the curtain on what for half-a-decade has been one of the Kremlin’s flagship projects, saying Turkey in the future could play an important role as a gas hub.

The Russian leader — whose relations with Europe have nosedived over the Ukraine crisis — warned the European Union now risked receiving less Russian gas and Moscow would look to new markets.

He said construction of the pipeline was not possible as the European Commission had forced Bulgaria to stop work under its territorial waters.

“Taking account of the fact that until now we have not received permission from Bulgaria, we believe that in the current conditions Russia cannot continue with the realisation of this project,” Putin said at a news conference alongside Turkish President Recep Tayyip Erdogan in Ankara.

The chief executive of state Russian gas giant Gazprom Alexei Miller was quoted as saying by Russian news agencies: “That’s it, the project is closed.”

Playing up Russia’s close ties to Turkey, Putin also announced that Russia had agreed to increase gas exports to Turkey by 3 billion cubic metres and that gas prices for Turkey would be cut by six percent.

Turkey is the second-largest European importer of Russian gas after Germany and Putin said Russia was even willing to build an entirely new pipeline to satisfy the demands of Turkish consumers.

Russia could also create a new energy hub on Turkey’s border with Greece that could serve consumers in southern Europe, he added.

– ‘Europe will get less’ –

Russian news agencies said Russian gas giant Gazprom had already invested almost $4.7 billion (3.7 billion euros) in the South Stream project. Some estimates had put the total cost of construction at around $20 billion.

The pipeline was to flow underneath Turkey’s waters in the Black Sea and through the Balkans, crossing Bulgaria, Serbia, Hungary and Slovenia and then Austria to connect with the main European pipeline network.

EU member Bulgaria, once a strong backer of South Stream, changed its mind on the pipeline in June under heavy and public pressure from the EU and the United States.

“Don’t you understand that it is ridiculous for us to put hundreds of millions of dollars into a project to go through all the Black Sea and then come to the surface before the Bulgarian shore?” Putin asked.

He slammed the “unconstructive position” of the European Commission, saying it had encouraged Bulgaria to block South Stream.

“If Europe does not want the pipeline to be realised then that means that it will not be realised,” said Putin, adding that Russia could look to deliver gas to other markets including LNG (liquefied natural gas) deliveries to Asia.

He warned that Russia could now lower gas volumes delivered to Europe.

“We will orientate our energy resources to other regions of the world,” he said. “And Europe will not receive those volumes (that it had) from Russia.”

“But that is the choice of our European friends,” he added acidly.

– Close ties –

Erdogan had personally welcomed Putin, on a one-day state visit, at the gates of his controversial new presidential palace in Ankara. The Russian leader was only the second world dignitary to visit the grandiose complex after Pope Francis on Friday.

The two countries agreed to realise the aim of tripling bilateral trade to a target of $100 billion in the next years from $32.7 billion in 2013, a goal some analysts see as wildly over-ambitious.

They reaffirmed their committment to Russia building Turkey’s first nuclear power plant in Akkuyu in a $20 billion project.

Russia and Turkey appear so far to have successfully shielded their close relations from potentially damaging disputes over the crises in Syria and Ukraine.

Putin’s visit came just over a week after talks between US Vice President Joe Biden and key NATO ally Turkey failed to reach a breakthrough on cooperating over Syria.

Commentators often note the similarities between Erdogan, 60, and Putin, 62, both charismatic strongmen accused abroad of authoritarianism, while retaining significant support at home.

Russia, isolated by the West over its role in the Ukraine conflict, is also looking for close cooperation with Ankara as it takes over the G20 presidency in 2015.


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