Russia Rejects Eni Call to Merge Europe Gas Pipelines

16.03.2010 (17:19) | Bloomberg Businessweek

South Stream is “more competitive” than Nabucco, Shmatko told reporters in Moscow

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Russia isn’t considering merging its South Stream gas pipeline to Europe with the rival European Union-backed Nabucco link, Energy Minister Sergei Shmatko said.

South Stream is “more competitive” than Nabucco, Shmatko told reporters in Moscow today. Paolo Scaroni, chief executive officer of Italy’s Eni SpA, Gazprom’s partner in South Stream, last week said combining the two pipeline projects would save time and money.

“We are not discussing these issues at all,” Shmatko told reporters in Moscow.

OAO Gazprom, Russia’s gas export monopoly, and Eni are equal partners in a venture to build South Stream under the Black Sea, shipping as much as 63 billion cubic meters of the fuel annually from Russia and central Asia to Europe. Rival Nabucco would deliver 31 billion cubic meters annually from eastern Turkey to Austria, bypassing Russia.

“The need to diversify energy flows to Europe is understandable; we think that Nabucco and South Stream are far from being competitors,” Shmatko said. “For the European consumer, the more gas the better, and more competition; but we are sure in terms of competition we are stronger.”

Russia has gas to fill the pipeline and has signed agreements with transit countries for the onshore section of the link, Shmatko said. Austria, a proposed terminus for South Stream’s northern branch, is yet to sign an accord with Russia. Shmatko said the next round of talks with Austria will be held in the next week or two. South Stream’s southern arm is likely to end in Italy.
Europe may need to import an extra 180 billion cubic meters of natural gas annually by 2020, stretching available supplies as China, India and Pacific member nations of the Organization for Economic Development and Cooperation seek more natural gas, Scaroni said last week.

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