South Stream: spats over the gas pipes

Russia has abandoned its plans to build the new South Stream gas pipeline through Bulgaria.

Russia said that it has abandoned plans for a new gas pipeline to Europe through Bulgaria, following opposition by the European Union. The $20bn South Stream pipeline, funded by Russia's state gas giant Gazprom, was to run under the Black Sea to southern and central Europe.

The pipeline was intended to bypass Ukraine by sending gas through Bulgaria, but the European Commission said the pipeline needs to conform to European competition rules and pressured Bulgaria not to back the project.

"We see that obstacles are being set up to prevent its fulfilment," said Russian president Vladimir Putin at a joint press conference with the Turkish president, Recep Tayyip Erdogan.

Instead, Putin said Russia will look to create a gas hub on the Turkish-Greek border to compensate for the loss of South Stream. "We will re-concentrate our energy resources on other regions of the world," said Putin.

"We will work with other markets and Europe will not receive this gas, at least not from Russia," he added.

What the commentators said

EU and US sanctions on Russia following the country's intervention in Ukraine has led to a game of political brinkmanship between Russia and the West.

Although Gazprom has not been targeted by the EU and US, the South Stream project "struggled to raise financing for the €14bn offshore section of the pipeline due to Western sanctions on Russia that have made European banks cautious about lending to a Gazprom-led consortium".

That assessment was probably accurate, suggested Mikhail Krutikhin, a Russian energy analyst, quoted in The Guardian. By sending gas through Bulgaria, Russia's plan was to punish Ukraine further by cutting it off from gas flows. "From the beginning this was a political project... it was never economical to spend so much on this pipeline."

Recommended

The uranium price is soaring – here’s the best way to play it now
Energy

The uranium price is soaring – here’s the best way to play it now

Uranium, the key ingredient to nuclear power, has been ignored since the bubble of 2006, but now the uranium price is rising again. Dominic Frisby exp…
22 Sep 2021
I wish I knew what contagion was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what contagion was, but I’m too embarrassed to ask

Most of us probably know what “contagion” is in a biological sense. But it also crops up in financial markets. Here's what it means.
21 Sep 2021
How high energy prices are driving up food prices too
Soft commodities

How high energy prices are driving up food prices too

High energy prices aren’t just affecting our heating bills, they’re making food more expensive, too. Saloni Sardana explains what’s going on.
21 Sep 2021
What you should do if your energy provider goes bust
Personal finance

What you should do if your energy provider goes bust

At least four energy firms have gone under in recent days as the price of gas and electricity soars. Saloni Sardana looks at what to do if your energy…
20 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
How to stop recurring subscriptions becoming a drain on your money
Personal finance

How to stop recurring subscriptions becoming a drain on your money

Tracking and pruning subscriptions isn’t as easy as it sounds. Here's how to take charge.
14 Sep 2021