Serbia: South Stream for sure?

Serbia: South Stream for sure?

By Neil MacDonald

Will Serbia get a piece of Gazprom’s South Stream pipeline or not? Vladimir Putin, Russia’s prime minister, rattled nerves across the region this week by saying “different versions” of the route were under consideration.

Officials have since moved to reassure Serbians by promising Gazprom will build the pipeline in one form or another and Serbia does not need to worry about being left out.

Putin’s calls for deeper political and economic cooperation with the region have prompted energy and infrastructure officials to open negotiatons on construction of the “main pipeline” through Serbia starting in 2013.

The project, a joint venture with Italy’s Eni, is meant to complement Gazprom’s parallel North Stream and bring even more Russian gas to the European Union. Serbia’s €700m segment will extend roughly 470km, providing capacity for 40 bn cubic metres of gas per year, officials said.

Gazprom is bargaining with Turkey over how to send gas across the Black Sea. If an undersea pipeline proves difficult, gas may instead be liquefied and go by ship to Bulgaria, Putin said.

Either way, the pipeline will enter eastern Serbia from Romania or Bulgaria and then exit through the north, either into Hungary or in the direction of Austria, said Leonid Chugunov, Gazprom’s project management director. Project documents would be ready by mid-2012, with tenders to follow – soon enough for gas to flow by late 2015.

This would bolster Serbian energy security and also stimulate the development of local gas distribution, Chugunov added. “The volume of gas supplies for meeting Serbia’s needs via South Stream will amount to around 4bn cubic metres of gas a year,” he said.

Critics – besides dismissing South Stream as a political ploy to undermine the rival, western-backed Nabucco plan – warn that a “gassified” Serbia will be more dependent than ever on Russia.

Yet no country wants to be sidelined if South Stream moves forward.

For Serbia, pipeline construction should create around 250,000 new jobs, attract up to €1.5bn worth of direct investment, and bring €4bn in transit revenues over 25 years of operation, said Marcel Kramer, South Stream chief executive. He also promised region-wide economic benefits.

Meanwhile, Serbian officials talked about boosting Serbian exports to Russia to reduce the trade deficit resulting from gas supplies.

Natural gas will make sense as an energy source, both economically and ecologically, for several decades, said Dusan Bajatovic, general manager of Srbijagas, the state-owned gas import monopoly.

He downplayed fears about “dependence”, telling beyondbrics in a recent interview: “North and South Stream appear good to most European countries, so there’s no reason this is not good for Serbia.”



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