The tense situation in Ukraine and deteriorating relations between Russia and Ukraine, EU, US can affect the gas pipeline project “South stream”. But, a simple analysis shows that even the growing tensions between Brussels and Moscow will not affect its completion.
While some critics argue that the viability of the project threatens the position of the supranational bodies of the EU. But until all the facts in favor of the “South stream”.
The supply of natural gas to the EU now provided mainly through the following suppliers: Russia (about one third of the total), followed by Algeria, Qatar, Norway and the Netherlands.
Sources of gas supplies to Europe (bcm)
| Source of gas imports | 2010 | 2011 | 2012 | 2013 |
| Russia | 144,5 | 156,6 | 148 | Was 167.2 |
| Transit through Ukraine | 93,9 | 99,1 | 78,9 | 82,3 |
| North Africa | 71,6 | 56,5 | 60,4 | 48,5 |
| Iran, Azerbaijan | 12,3 | 12 | 11,6 | 13 |
| Liquefied natural gas | 86,7 | 86.2 to | 63,7 | 45,8 |
The Netherlands announced recently that gas production will be significantly reduced, which is associated with environmental causes, and irreversible reduction in stocks, as the authorities intend to maintain the level of reserves to ensure domestic consumption for as long as possible. The cost of Norwegian gas will grow, so as to develop new reserves is becoming more and more expensive, and the UK, which is the largest importer of gas from Norway, plans to increase volumes of deliveries to 30%.
Pipelines, South stream, ITGI and TAP
Simultaneously, Qatar has steadily increased its exports in the Asian direction, where it can get almost 80% more due to the price when you export the equivalent of 1 thousand billion cubic meters of liquefied natural gas.
In addition, Algeria is increasing its own domestic demand, while it also tries to maintain close ties with “Gazprom” for the implementation of future joint projects, and the volume of recoverable reserves in the country, apparently, reached a maximum level.
The entire volume of reserves in Algeria is about 4 trillion cubic meters, equivalent to 5-6 years of consumption in Ukraine or in Turkey. That is, these stocks definitely will not solve the problem of the EU from a strategic and long-term perspective.
Azerbaijan, although deeply involved in the opening of the southern corridor and supply in Turkey and EU through a system of pipelines TANAP – TAP, has only 1 trillion cubic meters in proved reserves during the growth of the domestic consumption. That is, the gas can be offered to Georgia, Turkey and even Greece and Bulgaria, but to put it in the EU, the country will not be able in the medium term.
Other major players, such as Turkmenistan and Uzbekistan, is focused on the gigantic Chinese market, but also closely linked with Russia in terms of economy and in terms of policy.
In fact, only Iran, with proven reserves of 30 trillion cubic meters, can play a significant role in the European market. But the pressure from Western countries and Saudi Arabia hardly makes possible the fruitful cooperation between Europe and Iran, and the authorities consider Chinese and Indian markets as an alternative. In addition, by 2025, domestic consumption may rise to 400 billion cubic meters And the cessation of projects on nuclear energy will lead to further growth of domestic needs.
Consumption and production of gas in OECD Europe
| Figure | 2010 | 2011 | 2012 | 2013 |
| Consumption | 560,4 | 511,1 | 502,2 | 503,2 |
| Production | 293,6 | 272,4 | 274,9 | 270,3 |
As a strategic direction should also consider shale gas. There are a number of countries, which have the theoretical potential to use shale reserves.
Countries such as Poland, Romania and Ukraine, have this potential according to preliminary studies. But you must understand that the preliminary results do not guarantee real reserves, and the shale revolution, which for some can dream, unlikely to happen again. In Europe a very great population density, a limited amount of fresh water, the economy is closely linked with the real estate, tourism, agriculture, and the sector might suffer in the beginning of shale gas.
And if in the US the cost of field development was compensated by a large number of advantageous credit lines, in Europe this will take place against the background of economic problems and difficulties with access to capital.
Limited medium-term prospects may be the export of shale gas from the US to Europe. But as long as 20 potential LNG exporters, only six are viable. And they face a number of challenges such as lack of infrastructure in the United States and Europe; the cost of shipping supplies; effect on domestic US prices; higher prices in the Asia-Pacific region, making it more profitable for exporters; the limited nature of resources.
The United States is now the volume of reserves of shale gas corresponds to a 13-year-old the current level of consumption, and it can hardly be used as argument for a stable long-term reduce dependence on Russian gas.
