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Putin ditches South Stream project and turns to Turkish market

02nd December 2014

Russian president Vladimir Putin called time last night on the South Stream pipeline project to link southern Russia to the EU via a subsea pipeline landing in Bulgaria, citing unfavourable EU legislation as the chief cause, and overseen a new agreement that will see the subsea pipeline redirected south to Turkey

Putin ditches South Stream project and turns to Turkish market
Putin commented that the EU blocking the project in Bulgaria "is against Europe's economic interests and is causing damage"

"Taking account of the fact that until now we have not received permission from Bulgaria, we believe that in the current conditions Russia cannot continue with the realisation of this project," said Putin in Ankara, alongside Turkish president Recep Tayyip Erdogan.

Instead, Putin has announced a new transmission network via the Black Sea to Turkey, who would also receive significant gas discounts.

South Stream was Gazprom's global infrastructure project aimed at constructing a gas pipeline with a capacity of 63 billion cubic metres to Southern and Central Europe for the purpose of diversifying the natural gas export routes and eliminating transit risks. The first gas delivery via South Stream was planned in late 2015.

Alexei Miller, head of Gazprom, was also in Turkey and confirmed that the proposed pipeline was finished.

"The project is closed," he told reporters.

EU legislation to prevent gas suppliers from holding a monopoly over production, transmission and supply came into force after agreements over the South Stream project were formed.

Putin commented that the EU blocking the project in Bulgaria "is against Europe's economic interests and is causing damage".

Relations between the EU and Russia have soured since the Ukraine crisis and the imposition of economic sanction.

"If Europe does not want to carry out (South Stream), then it will not be carried out, We are now going to focus our energy resources in other directions," added Putin.

The deal with Turkey would see gas piped under the Black Sea by Gazprom, with Russia also proposing a gas transit hub to the EU on the Turkey-Greece border.

The new gas pipeline will have a capacity of 63 billion cubic metres, with 14 billion cubic metres slated for Turkish consumers (identical amount is being delivered via the Balkan Corridor) and nearly 50 billion cubic metres conveyed to the border between Turkey and Greece, where a delivery point will be arranged.

The Russkaya compressor station being under construction in the Krasnodar Territory will serve as the pipeline starting point.

Miller signed the initial deal with Turkish firm Botas Petroleum Pipeline regarding the subsea pipeline.

"As our cooperation develops and deepens, I think we will be ready for further price reductions," said Miller to reporters. "As we develop our joint projects ... the level of gas price for Turkey could reach the one Germany has today."

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