The Great Gas Game: Russia plays Romania against Bulgaria

2010/10/21

waz.euobserver.com

DAN ALEXE

Moscow is using Romania to put pressure on neighbouring Bulgaria as part of an energy game being played between Russia’s South Stream pipeline project and its EU rival Nabucco.

Romania seems to have no objections to this scheme and is clearly convinced that it will be able to choose which project it wants to participate in at the end.

The rival ventures have planned to construct pipelines to transfer natural gas to Europe; from Russia in the case of South Stream; from the Middle East and across Turkey in the case of Nabucco. Both projects are supposed to start delivering gas in 2015, but neither pipeline has been built yet and the exact transit routes are still unclear.

Last Wednesday (13 October), key representatives from both projects visited Bucharest for seperate meetings.

Russian Gazprom chief executive Alexei Miller had talks with Prime Minister Emil Boc and signed a memorandum of intent to prepare feasibility studies with the Romanian Transgaz company. That same day, Romanian President Traian Basescu met Wolfgang Ruttenstorfer, chief executive of the Austrian company OMV, which is a member of the Nabucco consortium.

While in Bucharest, Mr Miller said the South Stream project was advancing rapidly and that “there will be no problem with the financing.”

Despite the memorandum, Mr Miller immediately travelled onto neighbouring Bulgaria for talks with Prime Minister Boiko Borisov. After the meeting, Mr Miller announced that both sides had agreed to establish a 50/50 joint venture by November this year to construct the Bulgarian part of the South Stream pipeline. This deal has yet to be put in writing.

Romania is currently a transit country for more than 12 billion cubic meters of Russian gas delivered to Bulgaria, Macedonia, Turkey and Greece. Commentators have speculated that Russia prefers Bulgaria as a transit country for South Stream. Romania is closer to Ukraine, which the Russian project wants to bypass at all costs, and it is less well connected to the infrastructure of other Balkan countries and Turkey.

On the other hand, Russia had been losing patience with Bulgaria’s government, which announced in June that it would revise Russian-backed energy projects. In this light, Moscow’s talks with Romania seemed a demonstration of strength to show Sofia that it could easily be abandoned.

Russia has been delivering gas to Romania since 1979 and the contract between the two countries will continue until 2030. But while Bulgaria depends entirely on Russian deliveries, Romania produces most of the gas it consumes.

Romania, uncertain of Russia’s final intentions, continues to plays the European Nabucco card. OMV is the majority owner of Romanian oil company Petrom, the country’s biggest corporation and the largest gas and oil producer in Eastern Europe.

Last week’s meeting between Mr Basescu and Mr Ruttenstorfer also yielded some concrete results, with a promise by Mr Ruttenstorfer to augment OMV’s participation in Petrom’s social venture capital. He also gave reassurances that recent delays in the Nabucco project would not have serious consequences, since “demand for natural gas on the European market has diminished because of the crisis.”

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