Global Economics

U.S. Goes Neutral on Eastern Gas Pipelines


Under Obama, the U.S. is no longer backing only the Nabucco pipeline plan: In a nod to Moscow, the White House is more open to Russia's South Stream

An energy summit in Sofia over the week-end fell short of specifically backing Nabucco, Europe's planned new gas pipeline, or South Stream, its Russian rival, with the US administration adopting a conciliatory stance towards Russia.

In a visible shift in tone towards Moscow, Barack Obama's newly appointed energy envoy, Richard Morningstar, said the Nabucco pipeline was no panacea for solving Europe's energy security problems.

"Pipelines are just part of the puzzle. Nabucco is not the Holy Grail that will solve the problem," Mr Morningstar said.

The EU-backed, €7.9 billion project to pump gas from the Caspian region via Turkey, Bulgaria, Romania and Hungary to Austria has faced years of squabbling over terms. Meanwhile, Moscow has been actively promoting its own pipeline, South Stream, to run under the Black Sea and then through Bulgaria, Serbia and Hungary to Austria.

The previous US administration had backed Nabucco and criticised South Stream as just another means of strengthening Moscow's grip over Europe's gas deliveries.

Mr Morningstar however pointed out that Nabucco needs to be based on profitability for all the countries and companies involved in its construction, saying the US would only put in money as part of an international pool.

The shift comes after President Obama said he has pressed the "reset button" in relations to Russia after coming to office, stirring fears in some quarters of eastern Europe.

Mr Morningstar said he had had a constructive dialogue with Russian energy minister Sergei Shmatko, who was present at the Sofia summit, and stressed that the US would listen to what Russia has to say.

"I will be straightforward – Russia will continue to be a major source of gas for Bulgaria", he said.

The Bulgarian-hosted event aimed to prove that the two gas pipeline projects can co-exist and can both benefit from European backing.

Russian Prime Minister Vladimir Putin cancelled his participation at the last minute however, with Bulgarian Prime Minister Serghei Stanishev due to travel on Monday to Moscow to iron out divergences with his Russian counterpart over the transit fees for the planned South Stream pipeline.

Bulgaria, traditionally a Moscow ally and heavily reliant on Russian gas, was particularly hard hit by Gazprom's gas cuts in January and had to struggle for days without any supplies during freezing weather.

At a closing news conference, Bulgarian President Georgi Parvanov said the South Stream agreement should be signed when Russia and Bulgaria resolve their differences, adding that it was not up to Gazprom to determine Sofia's stance on foreign policy issues.

Also on Saturday, Bulgaria signed an agreement to explore options of buying gas and liquefied natural gas (LNG) from Egypt via Greece, where an LNG terminal is operational.

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