“We have started building the gas pipeline on the Baltic seabed, and gas will start flowing by this pipeline next year. We are working fast. And we will build South Stream just as fast,” Putin said at a meeting with Valdai Club members on Monday, September 6, when replying to a question from Turkish Centre for International Relations and Strategic Analysis President Sinan Ogan who asked about South Stream and Nabucco.
Putin said Nabucco had little chance of success. “The main problem with Nabucco is the absence of guaranteed volumes of necessary product in this pipe as there is no source for filling the system,” he said.
“Russia will not make any supplies there. The fields in Iran have not been developed yet. Azerbaijan has small volumes. Besides, Azerbaijan has signed a contract for gas supplies to Russia. There is Turkmenistan, but its volumes are not clear yet because gas pipeline has been built from Turkmenistan to China for 30 billion cubic metres of gas,” he said.
There are also other problems. “There is a territorial dispute between Turkmenistan and Azerbaijan over the Caspian Sea, and I think it would be hard to build the system in this situation, to put it mildly, not to say impossible,” Putin said.
“But theoretically I do not rule out that it could be possible if there is an interested company that is ready to invest billions without signing long-term supply contracts,” he added.
South Stream, which will be jointly built by Gazprom and ENI, will eventually take 30 billion cubic meters of Russian natural gas a year to southern Europe, with Greece becoming a transit state on the southern arm of the pipeline pumping gas to Italy.
Analysts have said that the project, which aims to link Gazprom's Siberian gas fields with Europe and is seen as a competitor to the EU-backed Nabucco pipeline, will cost around 10 billion euro, or 15.82 billion U.S. dollars.
The projected South Steam gas transit pipeline starts at the Beregovaya compressor station at the Russian Black Sea coast. It would run through the Black Sea to the Bulgarian port of Varna, where it splits - the southwestern pipe would go to southern Italy via Greece, whereas the northwestern route would go through Serbia to northern Italy, possibly including Croatia, Slovenia, Hungary, and Austria.
South Stream is scheduled to become operational in 2013. The 900-kilometer-long undersea section of the pipeline will run from the gas compressor facility at Beregovaya, on Russia's Black Sea coast, near Arkhipo-Osipovka, towards the city of Burgas, in Bulgaria. The sea's maximum depth on this route is 2,000 metres.
On the ground the pipeline will split. One (southwestern) branch will be laid across Bulgaria and Greece and the Adriatic Sea towards Brindisi, in Italy, and the other (northwestern one) may follow either of the two routes still being considered - Bulgaria-Serbia-Hungary-Austria, or Bulgaria-Serbia-Croatia, Slovenia-Austria.
South Stream is a strategic project for Europe's energy security and should be implemented by the end of 2015. Work is currently underway to draft a feasibility study for the marine section across the Black Sea and the surface section running through the transit countries.
The inter-governmental agreement signed in Vienna on April 25, 2010 between Russia and Austria on cooperation under the South Stream project removes all legal obstacles to its implementation.
The agreement was the last document that was necessary for the start of the project. Earlier, Russia signed similar documents with Bulgaria, Serbia, Hungary, Greece, Slovenia, and Croatia.
The 3,300-kilometre Nabucco pipeline is due to connect the European Union to gas deposits in Central Asia and the Middle East. It is planned to start the construction of the line between Turkey, Bulgaria, Romania, Hungary, and Austria in 2011. The project supported by the EU costs seven billion euros, but it is still unclear whether the pipeline can be filled.
The Nabucco project can be implemented but it is not clear whether it will be filled with gas to capacity, First Deputy Foreign Minister Andrei Denisov said earlier.
“As one of the proposed projects, Nabucco can exist, but prospects for filling it with gas are not clear and must be guaranteed,” he said.
“It is impossible to create such technical facilities on the off chance,” the diplomat said.
“Three potential gas suppliers are being considered for Nabucco: Azerbaijan, Iran, and Turkmenistan. Hydrocarbon reserves in Azerbaijan are big but not big enough to ensure the transportation of 20-30 cubic metres of gas a year. And smaller capacities will make no sense,” he said.
“Iran has the world's second largest gas reserves after Russia. But they have to yet to found and developed, and infrastructure has to be created. And this will require tens of billions of U.S. dollars,” Denisov said.
“We can speak about Nabucco only as a matter of a distant future,” he said.
The pipeline will transport gas from Turkmenistan, Kazakhstan and Uzbekistan to Ukraine through the Caspian Sea, Azerbaijan, Georgia and the Black Sea.
The first gas supplies by this pipeline from Azerbaijan are expected in 2012. According to experts from the pipeline consortium, Nabucco may be able to transport natural gas from Iran after 2017.