The Resurrection of South Stream
The recent introduction of the Turkish Stream (Turk Stream) pipeline project aimed as an a alternative gas supply route to the cancelled South Stream pipeline project, looks like a revival of the latter in most respects.
Countries that were to be a part of the route of South Stream, are presently drafting plans that have as a basic parameter the introduction of the Turkish Stream and consequent spurs of it to shift gas into Central Europe.
Hungary, though its Premier Victor Orban, stated that the country is in talks with Greece for bilateral gas plans and that Budapest is very interested in securing a role in the transfer of Russian gas through a proposed spur of Turk stream from Greece, FYROM, Serbia and then to Hungary.
The approach and interest of the Hungarian side was confirmed by the Greek energy ministry which plans in due term to hold bilateral talks. Concurrently Hungary managed to get an impressive decrease of the price of gas it supplies itself from Gazprom. Thus, it will now import gas at a price of 260 Dollars per 1,000 bcm, whilst in 2009 it had to pay around 500 Dollars for the same quantity.
It is fair to assess that Hungary will eventually clash with the EU's plans for an Energy Union, by which all member states will be obliged to send their intergovernmental agreements to Brussels for review and approval. The same can be said for the Greek government which has unofficially, but practically agreed to take part in the Turk Stream's expansion into the Balkans and Central Europe.
In the meantime Bulgaria, which for the moment has been left out of the project, is formulating an idea to create a significant gas hub in its territory, based primarily on the Interconnector Greece-Bulgaria (IGB). The aim of the Bulgarian gas hub would be to have a peripheral reach, up to Hungary through a series of interconnectors and a boosting of underground storage facilities. Therefore the import of Russian gas in competitive prices is of vital nature, since the proposed Azeri gas to reach the Balkans around 2020, will barely be enough to cover Bulgaria's domestic consumption.
In a twist of energy diplomacy, the Russian head of State, Vladimir Putin, during his visit to Hungary, left a window of opportunity open for Bulgaria, suggesting that if the EU's Commission allows it (and perhaps finances it), then an underwater section of Turkish Stream could reach Bulgaria, making it an integral part of the project.
Sofia as faces a challenge as the Greek government appears to seek to acquire a leading position in the regional gas sector, coupled with LNG infrastructure, could marginalize Sofia. Under these circumstances, it would be likely that Bulgaria would proceed in its own rapprochement with Gazprom, which will eventually put this country-once more- in a gridlock with the EU's Energy Union plans.
The Russian stake in the overall EU's supply seems likely not to decrease and potentially increase. The production of Netherlands is gradually decreasing, since its main Groningen field is blamed of causing earthquakes, and its reserves have been slowly exhausted. Its current production stands around 80 bcm per annum and it is forecasted they will be less than 60 bcm by 2025. Norwegian production of gas is stabilized in a level of around 100 bcm per year, able to secure supplies for another 18 years to the country and the EU's market. Algeria's proven reserves and current production holds bigger promise for an eventual EU "diversification" from Gazprom, but only concerning countries like Spain or Italy, due to insufficient amounts.
In reality Russia’s predominance in the EU market for the coming decades is only hypothetically threatened by Iranian and Turkmen imports, which for a variety of geopolitical reasons are highly questionable to be sourced. Moreover it is highly unlikely that the European capitals would prefer an increased reliance to Teheran versus Moscow.
For all the above reasons, the new Turkish Stream plan, is formulating to become a "new South Stream" bringing about the same political, regulatory and diplomatic complications that the former project caused in Southeastern Europe. The aim of the EU to have an Energy Union will only make things more complicated, due to the fact that countries not in the EU such as Turkey, Serbia, and FYROM are either formally or informally eager to be a part of the new route.
In summary, a new round of intense antagonisms is to be expected due to the introduction of Turkish Stream. It can be estimated that the plan that has been "leaked" so far for a route going from Greece to Southern Italy and then Northwards has little chances of success due to financial reasons and lack of cost effectiveness.
On the contrary, the linking up of the Turkish Stream with the old route from Greece/Bulgaria up to Austria is the only logical and sound path. It is also certain that this may cause political tremors the countries in between and in relations with the EU.