The Balkan natural gas pipelines

Nov 28, 2009

By Ioannis Michaletos

The Balkan Peninsula, is on the verge of becoming a focal region for the European energy security system for the coming decades, judging by the multiple of investment plans being developed, that are related to the construction of pipelines transferring natural gas.

Below, the most important plans are going to be presented, along with some details regarding their technical status, political implications and feasibility estimations.

1) South Stream pipeline (Natural gas)

The Russian energy giant, Gazprom along with the largest Italian energy company ENI and the collaboration of the French EDF have planned of constructing a 15 billion Euros worth pipeline that will transfer gas from the unified gas network of the Russian Federation from the port of Novorosysk up to the Italian port of Otranto. The pipeline is to have a total length of 3,300 km, traversing through the Black Sea and then divided into two branches, one through Bulgaria-Serbia-Croatia-Slovenia-Italy or Austria and a second one from Bulgaria-Greece up to Italy.

Almost all countries have signed the approrpiate investment and technical agreements and its construction is estimated to begin in 2011, becoming operational in around 2015. It would be able to transfer 30 billion cubic meters of natural gas per annuam with capability of enlarging this capacity in the mid-term.

Implications

Ukraine is being by-passed, thus loosing its advantage of being able to stop Russian gas exports to Europe and in a sense its geoeconomic importance is being downgraded both for Moscow and the Western consumers

The Balkan countries upgrade their importance for the EU and in parallel gain access to substancial quantites of gas that they could store in order to avoid supply issues in the future.

Considerable investments are on sight for the fragile Balkan economy along with opportunities for cooperation between the neighboring nations that traditionally strive for peripheral antagonistic endeavors.

Geopolitical importance: Great

Supply: Secured from Russian and possible Kazakh reserves

Possibilities of being constructed: 50%

2) Nabucco pipeline (Natural gas)

It is a 15 billion Euros plan by the following companies OMV (Austria), MOL (Hungary), Botas (Turkey), RWE (Germany), Bulgargaz (Bulgaria) και Transgaz (Rumania).

The plan entails the construction of a pipeline, able to transfer 30 billion cubic meters of natural gas a year from Azerbaitzan-Uzebekistan through Turkey to Bulgaria-Romania-Hungary-Austria. It is expected to commence its construction phase in 2001 and be completed by 2014-2015.

According to many analyses it is a competitive pipeline to that of South Stream, whislt there are quite a few points of view that correlate the completion of Nabucco with the political developments in Iran, since it is likely that this country would be the only reliable supplier for Nabucco for the coming decades, judging by the quantities demanded according to current business plans.

Implications
The Nabucco plan bypasses both Ukraine and Russia and established a new order in relation to the European energy security regarding natural gas imports. It also elevates the role of the Caucasus and Central Asia for both the EU and each individual Balkan state participating. As far as investments is concerned the same apply as in the case of the South Stream. Last but not least, the role of Turkey is highly elevated so its influence in the Balkan countries.

Geopolitical importance: Great

Supply: Partially Secured by Azeri supplies. Shoudl Uzebekistan and most importantly Iran participate it will have 100% supply viability

Possibilities of being constructed: 50%

3) Trans Adriatic Pipeline (Natural gas)
This is another planned pipeline being administered by the Swiss company EGL and the Norwegian Statoil. The plans is to construct a pipeline from Iran to Italy through Turkey-Greece-Albania.

In reality the pipeline will interlink existing gas networks, thus diniminishing costs to only 1.5 billion Euros and it is scheduled to begin its construction in 2012 and be operational by 2014 and it will be able to carry 20 billion cubic meters of gas a year. The main question regarding this pipeline is the “Iranian question”, meaning the embargo against Irana nd the general issues conerning this country with the international community, a situation that hinders an investment like this one.

Implications
It upgrades Turkey’s role in the Balkan and European energy security environment, but also links Iranian interests with those of the European Union and the Balkan states.

Moreover it reduces both the significance of Russia, Ukraine but also that of the Central Asian states. Because its construction is related to any developments regaridng Teheran’s compliance with the international community for the nuclear program of the former, it is rather speculative to judge how this pipeline would make a larger impact, since a lot of parametrs will change as as soon as Iran changes its current political position.

Geopolitical importance: Great
Supply: Secured only if Iran re-integrates itself in the international community, due to its nuclear program issue.

Possibilities of being constructed: 25%