Interview with Ron Smith

Ron Smith, head of research at Alfa Bank, commented on the Balkan energy forum starting on Sunday in Zagreb.

Russia Today: Vladimir Putin is billed as a guest at the forum. Do you think Russia will be at the centre of the discussion there?

R.S.: Absolutely. There are several reasons. One is that Russia has a historic relationship with these countries that goes back to Soviet days, when they were in the sphere and worked closely together, so they have historic ties. Second – the sheer size of Russian economy versus these indicates it's going to be very much a special guest. But finally, of course, the very core discussion for this meeting is about energy strategy. Russia is a major provider of energy, while these countries happen to set up a potential crossroad for energy, and therefore Russia is the key to the whole thing.

RT: Is this more of a political discussion, or will the participants unveil any specific strategies?

R.S.: I think potentially some sort of agreement may be signed, because the actual strategies that they are talking about have been on the table for quite a number of years. The pipeline that runs from Bulgaria to the Mediterranean, the extension of the Drujba pipeline to the Adriatic Sea and the potentially bringing Russian gas via Turkey to Europe – all of these have been on the table for year, but nothing has yet been done. Therefore giving in advance billing of this, I think it very possible that they actually announce some agreement in this case.

RT: What do you think is the future for the Russian energy sector in Southern Europe?

R.S.: There are only two possibilities. One is a transit area and one is for local demand. To be honest, the local economies are so small that they are pretty insignificant compared to Russia's overall energy exports. They are much more important as the transit area as they happen to be in a geographically advantageous place.

RT: There is talk of diversifying energy supply. If not buying energy from Russia, what other options might these countries have?

R.S.: For natural gas – practically none. There are no other producers of natural gas in the region that could potentially supply them. For oil – it is possible of course to bring in oil from Adriatic ports; however it would not be very cost effective versus the Russian option.