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Macedonia puts hope in South Stream July 25, 2010

Posted by Yilan in Macedonia, Russia.
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The recent news that Macedonia has a chance to join the Russian South Stream project has lit a spark over all the frozen hopes that the small country in the middle of the Balkans may yet face a bright future in the energy sector. The planned gas pipeline is to connect Russia with Austria and Italy through the Black Sea and the Balkans.

Domestic experts agree: South Stream gas pipes stretching through Macedonia, no matter how big they are, could provide a reliable perspective for faster growth and development. But, with a lack of information from both the Macedonian and Russian sides of the deal, doubt is inevitable. Is this announcement just Russian posturing to put the EU under pressure, or is there a genuine intention to make a step forward?

The chairman of Gazprom’s management committee, Alexey Miller, will visit Macedonia in autumn in order to speed up activities, Gazprom has announced on its official South Stream website.

“In case construction of the gas lateral from South Stream to Macedonia is deemed technically and economically feasible, the parties will initiate the signing of an intergovernmental agreement, a binding contract for gas supply and will set up a joint venture for the project management,” the official website said after Mr Miller’s meeting with Macedonian President Gjorgje Ivanov in mid-June.

The main purpose of Mr Ivanov’s visit was to finally sign a debt-clearing agreement. Of the six republics that have gained independence from former Yugoslavia, Macedonia was the last to conclude such a contract, worth $60 million.

Gazprom intends to invest the money in another project – an old, long-awaited gas transport pipe to Macedonia started one decade ago but never finished. Total costs are expected to run at about €300 million. Fifteen million US dollars are to be provided by the Skopje government and it is still not clear where the rest of the money will come from.

One of the international financial institutions mentioned as a possible co-financer of South Stream branch line in the country is the European Bank for Reconstruction and Development (EBRD). The bank said that “EBRD is taking into consideration a number of gas pipelines in the region and is in the early stages of negotiating with the Macedonian government for potential co-operation.”

The European Commission has declined to comment.

Still, Macedonian energy experts were very excited about their country’s South Stream perspective, a potential solution to serious energy supply problems. The vast majority of Macedonians use electrical heating and air-conditioning.

Professor Konstantin Dimitrov, president of the Macedonian Centre for Energy Efficiency (MACEF), says that it is still not clear how much capacity this new South-Stream lateral will have.

“Is it predicted to supply the gas needs of Macedonia only, or there will be a possibility for it to go through Albania and Kosovo too?” Dimitrov asked. “If the latter, that pipeline should have twice the size.”

The president of the Association of Macedonian Energy Experts (ZEMAK), Zoran Bozhinkochev, said “It’s very important for this country to solve the gas transport question. The South Stream lateral is a big plus, but I am a little sceptical how come that after all those contracts with neighbouring, regional and Western European countries, now all of a sudden, Macedonia should have a deal with Gazprom … if this really happens, it will be the most important news for the Macedonian energy sector in decades.”

According to official calculations, the country needs an additional 1.2 billion cubic meters of gas annually than it gets today.

Political analyst Mersel Biljali suggested that Macedonia has missed its chance to become part of the main gas and oil pipelines network in the region. “Neither the Russian South Stream nor the European ‘Nabucco’ are planned to go through this country. Now we might get a lateral that will be used only for consumption, not for transit. This can be seen as a governmental signal that we have an alternative to Nato and EU. But I consider it child’s play,” Mr Biljali said.

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