Azernews.Az

Russia's South Stream gas pipeline project could fail, analysts say, linking the hurdles to its implementation with cost overruns.
The Russian Energy Ministry has said the preliminary cost of the planned pipeline was $20 billion, or twice as high as the previous estimate, and nearly three times over that of the West-backed NABUCCO pipeline.
The Moscow-backed route to southern Europe, which will be jointly built by Russian gas monopoly Gazprom and Italy's ENI, seeks to export 30 billion cubic meters of gas per year through the Black Sea to Balkan states and other European countries.
Sergei Shmatko, the Russian Energy Minister, discussed the South Stream project with Claudio Scajola, Italy's Minister for Economic Development, in Moscow early last week.
The pipeline, which is to be operating in 2013, is to stretch 900 km under the Black Sea to Bulgaria and then split into two onshore routes -- to Italy and central Europe. Russia has agreed to route the pipeline through Bulgaria, Serbia, Hungary and Greece. Agreement has also been reached on Austria's joining the South Stream project. Gazprom is also in talks with Slovenia to join the project.
Although South Stream's construction cost was initially set at $10 billion, the Russian Energy Minister's statement on doubling the project cost has decreased the participating countries' interest in the project. Russian analysts say the increased cost will cause roadblocks in its implementation. Moreover, international financial institutions say high costs will make the project less attractive when compared to NABUCCO. Considering this, even if South Stream is built, the price for Russian gas to be sold to Europe will rise given that Russia, itself, will pay double the price, beginning in 2009, for Central Asian gas which will be transported through the conduit. Observers believe that if Europeans will be buying gas transported via South Stream for high prices, the interest in the rival NABUCCO project will increase. Along with eliminating dependence on Russian gas, European countries will be able to purchase cheaper gas, which can be supplied by NABUCCO.
Further, pundits say the South Stream project entails geo-political risks, as well. These mounting problems have many believing that Russia will not be able to overshadow the NABUCCO project.
The NABUCCO project seeks to deliver 30 billion cubic meters of gas from Central Asia and the Caspian region to Europe through a 3,300-kilometer pipeline traveling from Turkey through Romania, Bulgaria and Hungary to Austria. Building the conduit could take until 2012, while transportation of the first gas delivered via the pipeline is expected in 2013.
Only Azerbaijan has agreed to transport its gas through NABUCCO so far.