South stream and freedom from transit woes

With Russian Prime Minister Vladimir Putin holding talks with his Bulgarian counterpart, Boiko Borisov in Sofia about South Stream, Business RT spoke with Alexander Nazarov, Chief gas analyst at Metropol.

RT:The talks are expected to be the last step towards the start of construction – how important is the visit to the South Stream project?AN:“It is important but I wouldn’t say it is crucial, and for sure it is not a final visit there.The feasibility study of the project is not done yet, and I think the main purpose of the visit of the Russian delegation to Bulgaria is actually to form the legal entity in order to perform this feasibility study for the project.Also some other deals are expected and probably, although South Stream is a title project, probably it would not be the most important.”RT: So we have seen other high level meetings on South Stream, that other countries on the sidelines had other meetings, other deals, being made. Now this is the case then in Bulgaria, do you think?AN:“Yes absolutely, I think so.And although our Prime Minister, Vladimir Putin, is probably the most important person to visit Bulgaria to discuss South Stream, I think that some further meetings between Gazprom and the Bulgarian side.”RT: In the past there's been periods of non-cooperation between Bulgaria and Russia – do you think after today's visit it'll be full steam ahead in terms of South Stream construction?AN:“Probably not.The point is that there is a competition project there, Nabucco project and gas pipeline.Bulgaria is a crucial country for both of these projects.So probably Bulgaria will keep up waiting to make a final decision.To make, to enhance Bulgaria, actually, to make this decision, to preference South Stream project Gazprom export is likely to give a discount to Bulgaria, to discount the price of gas for Bulgaria by 5-7%.”RT:If South Stream does go ahead – this will mean the transit of gas through Ukraine will fall by, perhaps, 50 percent, what will be the consequences? AN: “Well everybody understands that if South Stream will be built, no modernization of Ukrainian gas system will follow that.So I think it is the crucial question actually, for Ukraine, but its non participating in the negotiations.And I think there are two scenarios.South Stream will be built, and no modernization of Ukrainian gas pipeline system will be there.Or opposite, Nabucco will be built, or none of these new gas pipelines will be built, in this case modernization of Ukrainian gas system becomes crucial.”RT:And what is your opinion of the South Stream gas pipeline project, is it a crucial one that needs to happen?AN:“Well the first point is I don’t think it is economically efficient, so I don’t think in terms of economy we need this pipeline, although it’s infrastructure project, it will help economy, not only of Russia but other countries. I think that the most easy way is to modernize Ukrainian gas pipeline system.So, in terms of political points there, I think building South Stream is to become absolutely independent for Russia from transit countries and it is probably the aim, the goal of current leaders of our country.”