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14 Oct, 2010 07:24

South Stream proving a bonus for Turkey

Gazprom is currently negotiating with Romania over its participation in the South Stream gas project, with Bulgaria pushing hard, but for Turkey it’s a case of the more gas projects the better.

Turkey is one of the youngest, the fastest growing and the largest countries in Europe, but it’s this bridge-like position between Europe and Asia which makes it an arena for rival international interests.

The main battle is for the southern energy corridor to supply gas to Europe bypassing the current transit country Ukraine.

The main pipelines in the running are the Gazprom led South Stream project, and Nabucco, backed by the US and EU. And there are other smaller projects.

Turkish energy minister, Taner Yaldiz, says the country is ready to accommodate all of them.

“Implementing one project doesn’t mean that we cancel another one. Turkey has the capacity to develop each and every project. Because consumers need it. There is demand. We should think not only about today, when there is a global crisis, we should think about 2015, 2020 – when demand will increase. “

Even then it may be too much gas for Europe. Analysts say, some projects will likely be abandoned. In the race to build new pipelines, Russia is trying hard to come first, securing gas and customers.

Konstantin Simonov, Head of the National Energy Security Fund, says Winning Turkey's agreement to lay the South Stream through Turkish waters came at a cost. Russia will have to invest up to $3 billion into Samsun-Ceyhan oil pipeline – strategically important for Turkey.

“The question is what will be the price? Because now we see that first of all Turkey wants Russia to invest money to Samsun-Ceyhan project – it’s the first benefit and the first part of this payment. The second idea is that Turkey wants to change the details of our gas contracts, Turkey wants to have more cheap gas from Russia.”

In the Byzantine world of pipeline politics, Russia will have to offer something – in exchange for the support of other countries along the pipeline routes.

This week Gazprom chief Aleksay Miller is visiting Bulgaria and Romania to discuss delivery of Russian gas and the future of the South Stream pipeline project.