Geopolitical fight over energy and security of energy supplies is in full force. All over the world small or big battles are fought at this moment. Europe is on mission to find alternative source of natural gas supplies, Russia is pulling out of South Stream gas pipeline project, Petronas is slowing down on LNG project in Canada’s British Columbia, and US Vice-President urges Croatia to jump in and build LNG terminal on island of Krk.
Russian President V. V. Putin stopped South Stream gas pipeline project based on his claims that Europe rejected it and that it doesn’t want it. According to Putin gas from Russian sources will be directed to other parts of the world including Turkey where he signed new gas pipeline agreement with President Erdogan.
“If Europe doesn’t want to realize this, then it means it won’t be realized. We will redirect the flow of our energy resources to other regions of the world”, said Putin of South Stream.
The defeat which Russia suffered with fail of this very important project will have significant effect on Russia’s economy and state budget. South Stream failure comes in weeks in which public learned that Western sanctions are leaving strong hit on Russian economy and regime ability to secure enough funds to perform its duties. “That’s a defeat that they are trying to mask as a victory. The South Stream project was dying despite many attempts Russia made, despite the money it spent to keep the project alive. Sanctions and the general mood in Europe made this project impossible”, said in an interview Igor Bunin, director for Moscow-based Center for Political Technologies.
The South Stream failure will have significant impact on several South and Central European countries among them Serbia which was supposed to be one of branches of this gas pipeline. Up to this moment Serbia invested some $30m, national budget was inclined to get approximately $250m from transport fees, thousands of jobs were expected to be created during and following successful implementation of the South Stream pipeline.
While Russia is getting out of the South Stream project in Southern and Central Europe, United States and European Union are working on new sources of energy to circumvent Russia and their pipeline network.
Central figure in that plan would be island of Krk in Croatia which would be LNG center and starting point of gas distribution to the rest of Europe. During his recent speech to the Atlantic Council Energy and Economic Summit US Vice-President Joseph Biden claimed that energy security of Europe is of essential and a vital security interest. Europe’s reliance on Russia as energy supplier Biden sees as “a huge strategic problem”.
“Croatia is another country with potential to become a regional energy hub if it makes smart investments now, with EU support, and works collaboratively with its neighbors”, said Biden in Ankara.
Biden also mentioned several other very successful LNG projects already built and functioning in Lithuania, Finland and Estonia, while pointing out that Cyprus could be another hub while Romania could become key intersection and delivery station to neighboring countries.
“We are hopeful the new E.U. Commission’s focus on Energy Union will be a step in that direction. So what do we need to do now? What actually needs to happen? Well, in our view, to start, we need to identify critical infrastructure projects, increase the interconnectedness between European countries — from pipelines, to electric grids, to integration of renewables, to energy efficiency standards”, said Biden.
Significant problem to EU-US plan to circumvent Putin and his regime could represent current state of oil market. Plunging price of oil caused already troubles to several energy projects around the world and one of them is based in Canada’s British Columbia. Malaysian Petronas said this week it’s delaying its proposed LNG terminal near Prince Ruper, BC. Petronas who recently has significant problems and issues with provincial government declared same resolved but expressed a view that current conditions are not right to continue proposed project.
Petronas would not continue this $36 billion project until costs are high and oil prices are below $70 US per barrel. Premier of BC Christy Clark said to local media province’s plans to build an LNG industry on the western coast of Canada are still on schedule despite this setback with Petronas project.