Turkey Plays Both Sides on Gas Pipelines
The Turkish deal is a major breakthrough for the Russian pipeline, which has to cross the maritime economic areas of either Turkey or Ukraine, but with Ukraine very unlikely to give consent.
At a signing ceremony in Ankara on Thursday (6 August), Russian prime minister Vladimir Putin and his Turkish counterpart, Recep Tayyip Erdogan, insisted that South Stream is not a rival to the EU-backed Nabucco pipeline project.
"Even with the construction of South Stream, Nabucco will not be closed," Mr Putin said at a news conference. "The more infrastructure projects, the better, because that will create reliability and stability of energy supply to Europe."
The European Commission also officially rejects the idea the two projects are in competition.
"We consider [South Stream] a complementary initiative to our ongoing Nabucco efforts," commission spokesman Martin Selmayr said at a press briefing in Brussels.
South Stream is designed to bring more Russian gas under the Black Sea to Bulgaria and Italy. Nabucco is to bring gas from Caspian Sea area countries to Europe via Turkey, bypassing Russia.
Experts warn that if South Stream is built the EU will be forced to buy Caspian gas at a much higher price, however.
"I argue that if South Stream is built, Nabucco will not be, at least not for Caspian gas," Zeyno Baran, a Turkish-American energy expert with the Washington-based Hudson Institute, told Euobserver.
"If South Stream is built, all that Caspian gas is going to pour into it. Nabucco is important not only for diversifying Europe's needs, but it's also freeing the Central Asian countries and the Caucasian countries from the hold of Russia. Now with this, Turkey sent a signal, whether it to wanted or not, that it doesn't really care about those countries, it just cares about becoming a gas hub."
Turkey just last month signed a legal framework agreement for Nabucco, raising hopes of the country's strategic backing of EU energy security interests.
"Europeans need to really understand what's going on in Turkey, how close it has gotten to Russia as opposed to Europe and the US," Ms Baran said.
In terms of geopolitical impact, South Stream would reduce the importance of Ukraine's transit pipeline network, which currently ships 80 percent of Russian gas to the EU.
The new situation would make it easier for Moscow to exert political pressure on Kiev by raising the price of its gas exports to Ukraine without the fear of a potential knock-on effect on its EU customers.
If South Stream is built before Nabucco, it could also see Azerbaijan sell its extra gas into the Russian pipeline, damaging prospects for Georgia's independence.
Georgia currently buys all its gas from Azerbaijan, with the country being forced to go back to Russian suppliers if its Azeri channels were blocked.
In a parallel development highlighting Russia's attitude to the energy sector, Mr Putin on Thursday also signed an executive order definitively rejecting the country's participation in the Energy Charter Treaty.
The 1991 multilateral agreement is designed to help EU companies invest in Russian energy firms and to grant access to Russia's vast pipeline system, effectively breaking its monopoly on Caspian zone exports.