Russia weighs radical options for South Stream link

17th March 2011, Comments 0 comments

Russia on Thursday weighed alternatives for its ambitious South Stream gas pipeline project amid reports that Turkey was purposely delaying its approval of the route through its Black Sea waters.

Russian Energy Minister Sergei Shmatko insisted that the project was not in doubt, according to Interfax news agency, but conceded there was discussion of cancelling the underwater section and transporting liquefied natural gas by ship instead.

Shmatko suggested that liquefied natural gas for the project could be transported from Russia's Far Northern Yamal peninsula, a distance of around 4,500 kilometres (2,800 miles).

"As an alternative, Vladimir Vladimirovich, there is delivering LNG from Yamal," Shmatko told Prime Minister Vladimir Putin at the cabinet meeting, calling it "the most attractive" option, according to the government website.

The pipeline project, championed by Putin since 2007, would pump gas from southern Russia to the Balkans and onwards to other European countries. It is seen as a rival to the European Nabucco project, which will bypass Russia.

Earlier Thursday, Russian newspapers said Russia was discussing other options because Turkey was not willing to approve the link, although it initially promised to give the green light last December.

Putin last week raised the possibility of alternative routes for the first time, asking Shmatko to consider building a liquefied natural gas plant on the Black Sea.

Turkish Prime Minister Recep Tayyip Erdogan made minimal public remarks on the South Stream pipeline during a visit to Russia this week, saying merely that "joint work is continuing."

But Gazeta.Ru online newspaper reported that Turkey was delaying approval in order to bargain for lower gas prices.

Shmatko said Russia was not being held hostage by Turkey's failure to make a decision.

"We are definitely not hostages of just one particular situation," he said, Interfax reported.

But his proposal to ship liquefied gas from the remote Yamal peninsula, where navigation is possible only during the summer months, shows the increasing desperation of Russia's leaders, experts said.

"Has he seen the globe?" asked Mikhail Krutikhin, an expert with RusEnergy.

"Producing on Yamal for the South Stream is nonsense ... Once transported it would have the price of diamonds," he told AFP.

The only LNG plant project on Yamal is Yamal LNG, which holds the licence for the peninsula's South Tambey field. The company is owned by Russia's Novatek. France's Total acquired 12 percent of the project earlier this month, rising to nearly 20 percent in due course.

Talk of delivering liquefied gas to the South Stream project is "simply an attempt to scare the Turks," Krutikhin said, adding: "Russia is in a desperate position" as the project is delayed more and more.

© 2011 AFP

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