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Summit agrees on diverse gas supply routes

Veselin Toshkov
AP Writer

Sofia, Bulgaria — European countries and major gas producers taking part at a high-level energy meeting agreed Saturday to establish diverse supply connections and guaranteed gas deliveries for their industries already plagued by the global economic downturn.

The two-day meeting — dubbed “Natural Gas for Europe, Security and Partnership” — was attended by gas suppliers from the Caspian region, Central Asia and the Middle East, as well as importers from the Balkans and the European Union.

Discussions were dominated by Europe’s heavy dependency on Russian gas and its attempt to diversify its supply sources through new pipeline projects.

Supporters of the South Stream pipeline, which will transport Russian natural gas under the Black Sea through

Bulgaria to other European countries, sought the EU’s endorsement.

But Europe, which has been increasingly nervous about its reliance on Russia for energy, is supporting another pipeline, called Nabucco, which would import gas from the Caspian region and bypass Russia entirely.

The rivalry between proponents of the two projects was highlighted by Russian Prime Minister Vladimir Putin’s unexpected withdrawal from the meeting before it started, apparently because of differences with Bulgaria over the South Stream project.

Bulgaria had called the meeting to avert future energy crises, after it along with many other European countries saw their gas supplies cut in January amid a price row between Russia and Ukraine.

The final declaration from the meeting called for a rapid development of international gas infrastructure, pipelines, liquefied natural gas terminals and strategic reserves.

“In order to meet economic development and climate goals in the next 20 years, Europe’s demand for natural gas imports will increase and will necessitate new projects offering diverse energy suppliers, sources and supply routes for gas delivery,” the document said.

While both projects remain in the planning stage, South Stream definitely appears to have the edge.

Since its inception seven years ago, Nabucco has been mired in doubt about availability of non-Russian gas to supply it. That has dampened investor interest — a delay exploited by Moscow and Beijing to lock in gas from Central Asia, the projected source for Nabucco.

Russian Energy Minister Sergey Shmatko, who represented his country after Putin bowed out, said South Stream would guarantee lower prices for gas consumers than Nabucco.
Nabucco project leader Reinhard Mitschek said Europe’s long-term gas demand growth was enough to justify several gas pipelines and South Stream was not a rival to Nabucco.

And Jeremy Ellis of RWE, a shareholder in Nabucco, said that project “is Europe’s option for gas supply via the southern corridor.” He urged quick action on moving the project from the planning to the construction stage.

The U.S. has long been a proponent of alternative gas supply routes to Europe that would bypass Russia. The U.S. government’s special envoy for Eurasian energy issues, Richard Morningstar, told the meeting that natural gas will remain a critical part of the energy security question in Europe and Central Asia for the foreseeable future.

Morningstar said global gas demand is increasing, and he called for diversity of sources and routes “because there is not a single answer to energy security issues.”

“These include Europe’s work to integrate its markets, and the development of diverse supply routes and sources. In a similar vein, we must develop alternative technologies and improve energy efficiency to properly address our shared concerns of climate change,” Morningstar said.

Speaking to reporters after the meeting, Morningstar said Iran was a potential gas supplier for Nabucco.

“Obviously right now gas from Iran creates some difficulties for the United States as well as for other countries involved,” he said.

“We reached out to Iran, we want to engage with Iran, but it also takes two to go to the dance and we are hoping that there will be positive responses from Iran,” Morningstar said.

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