South Stream: What kind of project is it?

Austrian energy company OMV and Russia’s Gazprom signed a contract on the construction of the South Stream pipeline’s Austrian section. Read few comments.

Questions:

1. In your opinion, what is South Stream? A political tool of Russia or a genuine energy project?

2. What do you expect from the EU/member states toward South Stream?

Answers:

Jonas GrätzResearcher, Global Security Team, Center for Security Studies

Firstly, regarding Austria position towards South Stream.

Well I am expressing my discomfort with the situation where one of the old EU MS is obviously trying to undercut a common EU position on energy and also on foreign policy. Austria is obviously supporting South Stream on both the political and economic levels as a sort of “economic détente”. This will go along with an intensified pressure on the EU commission to soften its stance on the regulation of the pipeline, as Austria has also signed an intergovernmental agreement on South Stream with Russia back in 2010. Its implementation may come into conflict with EU rules. There is of course nothing wrong with building additional “gas highways” and it might even be beneficial to have them to supply Ukraine but the regulatory ramifications of this pipeline are not beneficial to the EU.

1. It is both. It satisfies Russia’s desire to circumvent Ukraine and become independent of transit countries on the way to the EU and thus ends the Soviet path dependencies of the gas transport system development. In the current context, it also serves to highlight the continuing salience of Russia as a respected actor in Europe. This respect stems from Russia’s ability to both cause energy supply problems and provide solutions for them. This ability is a function of Russia’s military and subversive power and its energy resources and energy companies. South Stream is also a project aimed at maximizing market shares in the region and to inhibit diversification of markets. It does so by trying to undermine the EU’s rules for gas transport by incentivizing EU Member States to go against those rules and to lobby for exemptions.

2. The EU Commission will try to uphold its current position since it is consistent with its rules-based approach. This will serve to delay the pipeline for some time. Over time, it will come under increasing pressure by member states and will delegate the decision to some working-level group. Some compromise with Russia will be found that is going to reflect Russian preferences to a considerable extent.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: