EU meeting turns into South Stream funeral

BRUSSELS - EU states who were to have hosted Russia’s South Stream gas pipeline have begun looking for other ways to improve energy security.

The seven countries’ energy ministers held talks in Brussels on Tuesday (9 December) with EU energy commissioner Maros Sefcovic i.

They tasked him “to clarify” whether Russian leader Vladimir Putin was serious when he announced in Ankara last week that South Stream is dead.

Putin said EU anti-monopoly laws made the project unappealing and that he will build a massive pipeline to Turkey instead.

All seven states - Austria, Bulgaria, Croatia, Greece, Italy, Romania, and Slovenia - say they are still awaiting official notification.

Some in the EU, including Germany's top Russia experts, think Putin might be bluffing to get them to put pressure on Sefcovic to relax the anti-monopoly regime.

The European Commission believes Putin did it because he cannot afford to build South Stream and because the war in Ukraine has already achieved the real objective behind the project - to destabilise Ukraine by bypassing its EU gas transit network.

Meanwhile, the group-of-seven said in a joint statement the Russian pipeline could be a good thing, if it was “in line with EU law”, because it would diversify supply “routes”.

But the bulk of Tuesday’s meeting was on building inter-connectors so that EU states can share gas if Russia cuts off parts of the bloc.

The ministers also spoke of new liquid gas terminals and about connectors to competing South Stream projects - “Tanap” and “East-Med”.

They agreed Sefcovic will convene a “high-level working group” to see what the EU can contribute from two budget lines: the bloc’s new €315 billion investment fund and the €6 billion Connecting Europe Facility.

In a related development, Bulgaria, Greece, and Romania the same day said they will build a “vertical gas corridor” to share supplies.

For his part, Sefcovic was careful not to offend Moscow by sounding happy about the death of the Russian initiative - the prevailing mood in Brussels.

But he told press on Tuesday that plans to build Tanap - bringing Caspian Sea gas via Turkey to the EU from 2019, bypassing Russia - are proceeding “on schedule”.

He also said the East-Med proposal - an Israeli-Cypriot plan to pump Mediterranean Sea gas to Greece and Italy, further reducing Russia dependence - “could be useful” and that the commission might take part in a feasibility study.

Italy’s deputy economy minister, Claudio De Vincenti, referred to South Stream in the past tense.

“I believe it could have been possible to find a [legal] solution to South Stream”, he told media.

He added that diversification of sources is “more important” than diversification of routes and encouraged Sefcovic to take part in the East-Med study.

Winter supplies

The threat of fresh EU gas cut-offs reared its head in July when Russia stopped supplies to Ukraine in a highly political price dispute.

Sefcovic noted on Tuesday that a temporary deal on winter supplies is holding up.

He said Ukraine on Monday pre-paid for 1 billion cubic metres of gas on the basis of interim discount prices.

But his remarks mask EU concern that Russian supplier Gazprom might turn off the tap in February once it gets over its current blip in cashflow.

His comments on Tanap and East-Med also mask concern in some ex-South Stream states that neither pipeline might ever be built.

“When it comes to pipeline proposals, we see at least three new ones every day: You could fill your attic with proposals”, a diplomat from one of the group-of-seven said.

Russia-Turkey axis?

If Putin does build a new pipeline to Turkey, it would deal a blow to Tanap, East-Med, and broader EU aspirations to reduce Russia dependence.

It would also mark a new alliance between two authoritarian leaders in the EU neighbourhood.

Some EU officials believe the Turkey option is not financially or technically viable, however.

One theory is that Putin announced it to save face, while Turkey’s Recep Tayyip Erdogan endorsed it to improve his negotiating position in EU accession talks.

Ankara thinks it would be “hypocrisy” for the EU to criticise the project because it revolves around EU states themselves buying the Russian gas on the Greek-Turkish border.

It is angling to open one or more of four new “negotiating chapters” in the EU entry talks - on energy, economic affairs, or rule of law. The talks are helping Turkey to make reforms, but few on either side believe the EU will ever let it join.