European Commission has criticized South Stream

Tomorrow in the presence of the Prime Minister V. Putin, Gazprom is to sign a legally binding agreement of shareholders with the participants of South Stream – ENI, EDF and Wintershall – on their joining the project and the warranties of its launch. But  the document is being prepared under pressure from the part of the  European Union. The European Commissioner G. Ettinger called the project to be contradicting the interests of the EU and threatened Gazprom with contract problems if South Stream competes with Nabucco. There will be a lot of possibilities for that for the European Union: it plans in the coming future to become a key party in all the gas negotiations of Europe.
Tomorrow at the investment forum Sochi-2011 Gazprom plans to sign the shareholder agreement with foreign participants of the South Stream project on the construction of the gas pipeline from Russia to Europe via the bottom of the Black Sea – ENI, Wintershall and EDF. The parties will sign a legally binding document that states in detail all the rights and obligations of the parties, distribution of stakes between them and parameters of the possible quitting the project, sources of Kommersant say. Up to the present moment Gazprom hasn’t signed anything like that with partners. It was about not binding to anything memorandums, but the shareholder agreement means the warrantee of the project’s realization. The document will be signed at the presence of the Prime Minister V. Putin. Neither Gazprom not the press service of the Prime Minister would comment on that.
The first line of South Stream is to be launched not later than in 2015 (capacity – 15.75 bln cubic meters of gas a year) and the head of Gazprom A. Miller assured that the project would follow the schedule. However, before the appearance of the key document on South Stream the  European Union, that has long been trying to fight with Gazprom’s monopoly and realizes the competing project of Nabucco, has started to put pressure on the participants of the Russian project. On Tuesday Deutsche Welle published the announcements of the European Commissioner, G. Ettinger, made in Cologne last week (his representative confirmed to Kommersant the words). The chairman assessed South Stream is an attempt by Russia to stop the Southern Corridor project, i.e. gas supply to Europe by passing Russia: from Turkmenistan via the bottom of the Caspian to Azerbaijan and then via Turkey with the use of the Trans-Caspian gas pipeline (the decision on its construction hasn’t been made as yet) and the gas pipeline Nabucco. 
G. Ettinger warned Russia: if it really thinks that South Stream or any other political influence on Ashkhabad and Baku make Europe turn away from the Trans-Caspian gas pipeline and Nabucco, I will trust less the long-term gas contracts and believe more that gas is a political tool. It is profitable for Russia to have a 30% stake in the gas market of Europe out of 600 bln cubic meters volume, rather than 40% out of 400 bln cubic meters, Mr. Ettinger said. So he let Russia understand that Europe will increase the actual gas purchase from Russia only in the case if the stake of Gazprom in the European energy market, and consequently, the dependence on EU from the Russian energy resources, falls. It is impossible without the construction of the Trans-Caspian gas pipeline.
It is not for the first time that the Russian party has heard such a strict position by Mr. Ettinger. In May, the day when the Russian delegation came to Brussels for the negotiations on South Stream, Mr. Ettinger in an article published in Kommersant publicly criticized the words of Mr. Miller that by the end of the year the price of the Russian gas in Europe will be $500 per thousand cubic meters. Then he said that he would like the cancellation of the export monopoly of Gazprom so that the gas price in Europe could fall.
However, in Cologne, Mr. Ettinger put pressure not only on Gazprom but on its partners of South Stream. The Energy Commissioner said that he doubts that the project will be realized: it is quite expensive to lay a pipeline via the bottom of the Black Sea (the underwater part of South Stream is assessed at €10 bln, the entire project - €15.5 bln). Mr. Ettinger spoke about the difference between South Stream and Nord Stream, which has been constructed. According to him, it has become a part of the European gas infrastructure and released out of the requirements of the third energy package. South Stream was not even promised such preferences.
The fact that the announcements were made by the European Commissioner is an unpleasant moment for Moscow also because it is the European Union that has recently wanted to be the main negotiator with Russia on the conditions of the gas import and also with other countries on the realization of the Southern Corridor. G. Ettinger actively lobbies the so-called “speaking with one voice” policy, when all 27 countries of the European zone should agree with each other the conditions of gas and oil supply from the countries outside EU and even allow the representatives of the European Union to the commercial negotiations with the suppliers of energy resources. The European Parliament is to consider this initiative by the end of the autumn. 
Gazprom, EDF and Wintershall didn’t comment on the doubts of Mr. Ettinger concerning the project, ENI didn’t respond. The Ministry of Energy told Kommersant that in the autumn, in Astrakhan, Russia plans to hold a conference of the Caspian countries, where the legal status of the Caspian will be discussed (the Trans-Caspian gas pipeline project depends on it), including with the participation of the European partners. The agency didn’t say if South Stream would be discussed, but the fact of the presence of the European party says much: on Tuesday the Minister of Energy S. Shmatko said that the legal status of the Caspian is the right of the Caspian countries and the European Commission doesn’t have any relation to it. So now this position changes.
They let us understand that the Trans-Caspian pipeline will appear anyway, and it is our business whether to construct South Stream or not in these conditions, the head of Rusenergy M. Krutikhin says. Now it is only the discussion, but there is still a risk that South Stream will be frozen or under-filled due to the Europe’s plan to launch the alternative pipe. On the other hand, the turning away from South Stream with the launch of Southern Corridor will mean for Russia the growth of the dependence on gas transit via the Ukraine and if today Moscow tells Kiev what to do, the situation will radically change, Mr. Krutikhin adds. The head of East European Gas Analysis M. Korchemkin says that it is clear that from the current situation Turkey will gain profit, via which Nabucco will go and that may or may not give Gazprom its permission to lay South Stream in its waters. Moscow won’t turn away from South Stream, that, according to the expert, is extremely expensive and will be negative for Gazprom’s economy, because for the Russian party it will mean it is defeated.  

http://www.kommersant.ru/doc/1773739
Translated by Galiya Musabekova