Winners and losers from the cancellation South Stream

by Uni Royalties Uni Royality The statement of Russian President Vladimir Putin's recent about stopping South Stream project has sparked much hype in the foreign press. Russian media presented as a brilliant move the Russian president, in which he Gazprom rid of an expenditure of about $ 24 billion dollars and leave the European Union without a considerable amount of investment. European press was divided in opinions, someone saying that the cancellation South Stream is a resounding failure Kremlin and a sign that Russia has serious problems of liquidity. http://buyingoilandgasroyaltyinterests.blogspot.com

I agree with this opinion, but I think deserves attention and the view that Europe has lost at a considerable investment in energy infrastructure. Especially for countries where this infrastructure is less developed, such as Bulgaria, Serbia and Croatia. South Stream was from the beginning a project politically motivated, with weak economic foundation. The economic aspect can be ignored by the years 2005-2008, when this project was conceived as Gazprom accumulated some impressive financial reserves. But the situation changed in the meantime.

A part of the financial reserves of the company managers were stolen by all sorts of projects and tenders. Another part was invested in the development of new gas fields. Currently, the price of oil (which is linked to the price of gas sold by Gazprom) decreased by 40% within 1 year.

West imposed financial sanctions on Russia for invasion of Ukraine were reduced liquidity to Russian companies at a critical level. They were denied access to European credit markets so that they can refinance their debts. Gazprom is not included in the list of companies subject to sanctions, but banks are reluctant to lend for fear of extending these sanctions in future and on.

Meanwhile the Kremlin and Gazprom tried to obtain loans from China, but the Chinese have negotiated prices painful for money given. And those who gave him money anyway fewer than are needed Kremlin. In this situation quitting South Stream is a brilliant move a "leader" in the Kremlin, but is one of economic common sense that Putin a swallows hard.

It is true that Europe has lost some investment? Of course, according to official figures from the European gas pipeline would cost $ 15.5 bln. But most likely a part of this money would be enough smart guys in the pocket, in the form of bribes. The price of this infrastructure would have been awful but rewarded by energy blackmail of Romania, Moldova, Ukraine and Poland partly.

They lost the countries through which the pipeline would pass investment and jobs? Of course, I already mentioned the amount is $ 15.5 billion. But how long construction of a gas pipeline? The project was to be completed in 2015, two years of work and hundreds (perhaps thousands) of workers are a great source of jobs. So who had the most to gain from the cancellation South Stream? Ukraine - still will retain the role of Russian gas to Europe transient and transit revenues will keep coming years. Following the destruction that took place after the Civil War, this revenue will be welcome.

Turkey - Russia has not given up entirely on the idea to redirect part of gas bypassing Ukraine. Putin said South Stream cancellation only plan to announce soon a new section of pipeline Blue Stream (pipeline that delivers gas to Turkey, all the Black Sea). This will cover Blue Stream 4 (!) Times Turkey's domestic consumption, so it is clear that it is export oriented, most likely via TANAP gas pipeline (from Turkey to Greece) and TAP (from Greece to Albania and then in Italy ).

In this way Turkey will become an important energy hub for Caspian gas transportation to Europe and Russia. China - less competition for Russian gas from Europe. European Union - Brussels pampalaii finally were able to mobilize to give a coherent answer to Putin. Perhaps they do not imagine that it will dispense with the South Stream, now can they catch more courage. Perdantii Putin - Amid declining oil prices, sanctions imposed by the West and the collapse of the Russian ruble, the cancellation of a bankrupt energy project are flowers on the plains. But the cancellation of a project promoted by the president is a heavy blow to its image so damaged. Putin's entourage - Doing business with the state is very profitable. Cost of mega projects is difficult to control, and can always still a little swollen.

The proof is the Winter Olympics in Sochi, which cost $ 52 billion, after initial estimated price of $ 8 billion. Much of this money in the pockets stop influential friends - some projects and earn money at stake, and another party receives bribes for granting these projects. Serbia, Bulgaria, Austria - from countries participating in South Stream, it would be major beneficiaries. Some of them have already managed to spend some money, which most likely Gazprom but will repay.

ENI, OMV, SAIPEM, WINTERSHALL - Here are the European partners pipeline and contractors for major works. Most likely, however, that they were well informed of the risks it has assumed, licenses for the construction of South Stream is blocked since the summer. Thus ends another chapter in the gas war between Russia and the European Union.

After pravalirea European project Nabucco project's turn and Russian. Why namely it must be a "war" and not a collaboration between two parties do not know. But most likely not the last battle. Considering, however, that Russia may export gas from Blue Stream only "heir" Nabucco - TANAP and TAP, we could get a day and a collaboration between the two powers. Unfortunately no pipeline or another, does not pass through Romania. The geography of this, it's pretty bad sometimes. https://youtu.be/5RZXTNibccU

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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