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Questions Raised Over Macedonia’s Possible Participation in South Stream June 28, 2010

Posted by Yilan in Macedonia, Russia.
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The announcement that Macedonia may join the Russian-led South Stream gas pipeline project has been generally welcomed by local energy experts but political analysts warn that such a move could have an unwanted impact on Macedonia’s EU and NATO aspirations.

During his visit to Russia last week, Macedonian President Georgi Ivanov and his host Russian President Dmitry Medvedev agreed in Saint Petersburg that both countries should work more closely on energy cooperation, especially concerning the gas corridor. Ivanov also met the CEO of Gazprom, Alexey Miller, to discuss the project.

“The issue of small Balkan countries like Macedonia joining South Stream is more of a political than economic issue for Russia,” journalist and former Macedonian Foreign Minister Slobodan Casule told Balkan Insight.

He argued that this should sound the alarm in Brussels to speed up its project for the full EU integration of the Balkan region and the construction of its own alternative to South Stream, the Nabucco gas pipeline.

“The EU must realize that by supporting irrational policies like that of Greece, it is slowly losing the Balkans,” Casule said, hinting at the ongoing Athens-Skopje name spat that has been stalling Macedonian EU and NATO accession progress since 2008.

Political analyst Merselj Bilali said that by agreeing with Russia on South Stream, Macedonia is trying to send a political signal to the EU that it has an alternative.

However, he warns that “these are childish games that can be spotted from the moon” and that at best the country could get a consumption gas route and not the main transit corridor which is set to to pass elsewhere, through neighboring Bulgaria and Serbia.

South Stream is a proposed gas pipeline that will transport Russian natural gas through the Black Sea to Bulgaria and further to Italy and Austria, transiting several Balkan countries on its way. The completion of the project is scheduled for 2015.

The Russian-led pipeline is seen as rival to the planned Nabucco project, backed by the European Union and the United States as a way of reducing Europe’s energy dependence on Russia.

Macedonian Finance Minister Zoran Stavreski, who was part of the delegation that travelled to Russia last week, noted that the construction of a South Stream section in Macedonia would put the country on the international map of energy corridors.

He said that part of the money needed to connect his country to the pipeline would come from the agreement under which Russia agrees to pay back its clearing debt to Macedonia, worth some $60 million.

On its Web site, Gazprom announced that Macedonia had expressed interest in joining South Stream, and noted that Gazprom would consider “the opportunity of constructing a gas lateral from the trans-national South Stream system to Macedonia”.

If the project is deemed economically feasible both states would start the procedure for signing agreements that would cover the specifics of the deal, such as the purchasing of gas and the formation of a joint company that would manage the project. The Russian gas supplier said that its head Miller would visit Macedonia in the fall to boost this process.

Konstantin Dimitrov, the head of the Macedonian Centre for Energy Efficiency, sounded a cautious note yesterday because, as he explained, many technical details about possible Macedonian participation are still unknown.

“It is still an open question as to whether the section would be designed to satisfy the needs of Macedonia alone or if it would continue to Albania and Kosovo, in which case it would have to be double in capacity,” Dimitrov told local media yesterday.

He revealed estimates saying that Macedonia would need some €300 million to build up its gas infrastructure for such a project.

According to official estimates Macedonia would need several billion cubic meters of gas each year. The partially completed gas pipeline that supplies only a small portion of the industry has a capacity of 800 million cubic meters. The 1.2 billion cubic meters that are missing could be covered by this project, energy experts say.

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