American markets are lying low before today’s inventory figures and the fed’s interest rates meeting. Oil is back around $115 and in this quiet time it’s worth looking at a major multinational European deal and its possible implications.
Russian President Vladimir Putin and Greek Prime Minister Costas Karamanlis signed a $15bn agreement to build and maintain the South Stream pipeline through Greece. The 550 mile pipeline, jointly built by Gazprom and Italian firm ENI aims to transfer 30bn cubic metres of gas per year from Russia to Bulgaria, where it will branch off, travelling northwest to Austria and southwest to Greece and Italy. The route will pass under the black sea and avoid congested shipping lanes.
Expansion for Gazprom is hardly surprising, but this time the Russian monopoly is stepping on the EU’s toes with no remorse. South Stream is in direct competion with the EU Backed 2,050-mile Nabucco pipeline. The EU plans for Nabucco to transport gas from ex-Soviet Azerbaijan and the Middle East to Southern Europe via Turkey, purposefully avoiding Russia. Nabucco was designed to provide European countries with an alternative to Gazprom’s increasing monopoly.
Gazprom’s agreement with Greece is a heavy blow to Nabucco’s plans, and comes on the heels of earlier agreements with Serbia, Bulgaria and Hungary. President Putin puts a positive spin on things as always, “Realizing the South Stream project doesn’t mean that we are fighting some other alternative project,” He said to reporters. “Please, if someone can find some other similar project under economically acceptable terms that can guarantee products of a sufficient volume for these gas systems, we will only be glad.”
The ‘Please’ makes that sentence almost patronising, is Oil Energy Money the only one doubting the former KGB agent’s honesty?
Keep checking in for updates from today’s meetings, as mentioned above. What will Uncle Ben Bernanke’s team say today? A hint at perfectly stable or even a hike in interest rates? Will the American surplus affect the price of oil? Please feel free to leave comments below
[...] North Sea reserves, Europe will have few alternatives to importing from the big three. The Nabucco pipeline was considered the last alternative to Gazprom’s South Stream pipeline providing gas to [...]
By: Russia, Iran and Quwait Plan Gas Cartel « Oil Energy Money on October 23, 2008
at 12:52 am