Putin: Russia forced to withdraw from S. Stream project due to EU stance

Another surprise move, out of left-field, by Putin

Dmitry Orlov repeats something said by the Saker, that the Russians never threaten like the Americans do. They just ACT, usually by surprise and they always negotiate with the enemy
Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead

ZeroHedge,

1 December, 2014

In retrospect, it should have been obvious in August.

Back then we wrote that the EU's poorest member nation, Bulgaria, had been an enthusiastic supporter of the Russian-backed South Stream gas pipeline project, whose construction has stoked tensions between the West and Moscow as it enabled gas supply to bypass troubled Ukraine (thus squeezing the desparate economy back into Russia's hands). In early June, Bulgaria's Prime Minister Plamen Oresharski ordered an initial halt (after Europe offered the nation's suddenly collapsing banking system a lifeline). Subsequently,Energy Minister Vasil Shtonov has ordered Bulgaria’s Energy Holding to halt any actions in regards of the project as it does not meet the requirements of the European Commission.

And then, just to send Putin a very clear message where the allegiances of this former Soviet satellite nation lie, NATO deployed 12 F-15s and 180 troops to Bulgaria's Graf Ignatievo Air Base.

A dozen F-15s and approximately 180 personnel from the 493rd, based at RAF Lakenheath, England, have deployed to Graf Ignatievo Air Base to participate in a two-week bilateral training exercise with the Bulgarian air force, Pentagon spokesmen Col. Steve Warren told reporters Monday.

The exercise began Monday and will continue through Sept. 1.

The purpose of the deployment is to “conduct training and focus on maintain joint readiness while building interoperability,” Warren said.

The move comes at a time when America’s Eastern European partners and allies are concerned about Russian military intervention in Ukraine. There are fears that Moscow might try to destabilize other countries in the region. 

“This is a reflection of our steadfast commitment to enhancing regional security,” Warren said about the exercise.

We concluded as follows: "How will Putin react one wonders?"

We now have the answer: earlier today, in a stunning announcement, Putin revealed that the South Stream project is now finished. As the WSJ reports, 

"Putin said Moscow will stop pursuing Gazprom’s South Stream pipeline project that would supply natural gas to Europe with an underwater link to Bulgaria, blaming the European Union for scuttling the project

“We couldn’t get necessary permissions from Bulgaria, so we cannot continue with the project.We can’t make all the investment just to be stopped at the Bulgarian border,” Mr. Putin said. “Of course, this is the choice of our friends in Europe.” 

“We think that the European Commission’s position was not constructive,” Mr. Putin said. “If Europe does not want to implement it, it will not be implemented.”

Putin is right: Europe - Austria excluded - had seen rising resistance to the South Stream in recent months as the crisis in Ukraine has intensified. The EU is concerned that the project would cement Russia’s position as Europe’s dominant supplier of natural gas. Russia already meets around 30% of Europe’s annual needs.

So what does Putin do? He signs a strategic alliance with NATO member Turkey, the only country in Europe that is anything but European (over the endless veto of Germany preventing its entrance into the EU over fears of cheap, migrant labor) and which lately has been increasingly anti-Western, to build a new mega-pipeline to Turkey instead. 

As RT reports, Gazprom CEO Aleksey Miller said the energy giant will build a massive gas pipeline that will travel from Russia, transit through Turkey, and stop at the Greek border – giving Russia access to the Southern European market. In effect, Russia will still have access to the Southern Stream endmarkets

The pipeline will have an annual capacity of 63 billion cubic meters. A total of 14 bcm will be delivered to Turkey, which is Gazprom’s second biggest customer in the region after Germany. 

Russia’s energy minister Aleksandr Novak said that the new project will include a specially-constructed hub on the Turkish-Greek border for customers in southern Europe.

In a joint press conference between Putin and Turkish leader Erdogan, the Russian said that the supply of Russian gas to Turkey will be raised by 3 billion cubic meters via the already operating Blue Stream pipeline, Last year, 13.7 bcm of gas was supplied to Turkeyvia Blue Stream, according to Reuters.

And another fringe benefit of becoming a preferred Russian ally: Moscow will reduce the gas price for Turkish customers by 6 percent from January 1, 2015, Putin said. Later, Novak said the discount could reach 15 percent, subject to negotiations. Sorry Ukraine.

And sorry Bulgaria, which despite being wholly reliant on Russian gas for its commercial, industrial and residential needs, has decided to side with the sinking European Union, making it merely the latest insolvent vassal state of the sinking Eurozone, something Putin made abundantly clear during today's conference:

• PUTIN: BULGARIA UNABLE TO ACT AS SOVEREIGN STATE OVER GAS LINK
• PUTIN: RUSSIA TO REORIENT ENERGY RESOURCES TO OTHER MKTS: IFX

Bulgaria should now expect its gas costs to boldly go where Ukrainian energy prices have so boldly gone before.

As for Turkey, the country that bridges Europe with Asia is merely the latest expansion of Putin's anti-dollar alliance:

• TURKEY, RUSSIA AGREE TO USE LOCAL CURRENCIES IN TRADE: TRT

Or, as Obama would put it, Russia just got even more "isolated."

From RT

'Exported oil paid for in foreign currency, Russia makes more money than expected'

The Russian ruble suffered its worst one-day fall since 1998, plummeting eight percent against the dollar. 

RT discusses the issue further with global financial markets expert Patrick Young.

This was such a good discussion I am reposting it

Dmitry Orlov: Russia's Patience Is Wearing Thin

Having lived in the former USSR before immigrating to the US, Dmitry Orlov has an invaluable perspective on both the US and Russian perspectives, as well as Ukraine.

With the western propaganda flying thick and heavy, it's more important than ever to cut through the chaff and learn what we can about the most important geopolitical realignment (and renewed tensions) in recent memory.

Who won? Who lost? You tell me!

Vineyard of the Saker,

2 December, 2014

I won't make this one long or analytical.  I am sure that somebody will do that within the next 24 hours.  But I will say this: the Ukrainians blackmailed Russia over gas, and that created North Stream and South Stream.  The Bulgarians decided to cave in to the Eurobureaucrats and that created today's deal with Turkey.  For 63bcm.  Which happens to be the maximal output of South Stream.  

But that is all short term.  The long term is this: Russia is creating a unified gas distribution network which will be able to send gas from anywhere in Russia to any part of the Russia border.

[Sidebar: The real market for Russian gas will not be a dying EU economy, but the growing and energy hungry mega-market of China.  Russia is also selling China it's top-of-the-line S-400 missiles which is a nightmare come true for the US and Taiwan.  And all of this involves huge sums of money, immense projects and a deep strategic alliance for decades into the future.]

As for Turkey, this "faithful" NATO member and US ally, it was more than happy to backstab the EU which had denied it membership for decades.  Not only did Turkey sign a deal with Gazprom, it also agreed to have Russia essentially built its entire nuclear industry.  Russia and Turkey also agreed to boost trade and tourism. Politics is politics, but business is business.  Nothing personal here, but Uncle Sam can go and... well, you know what :-)

As for the clueless Europeans, they appear to be literally speechless.  Especially the clueless Bulgarian and Serbian politicians who look like idiots and will have to do a lot of explaining to their own people.

The German economy is hurting because of the interruption of trade with Russia and Merkel is in very hot water.  Just like Hollande who has to explain why France is now looking at huge losses over the Mistral debacle.

The way I see it, not only did Russia not lose anything, Russia achieved two crucial things: she now firmly put Turkey into her corner (not a trivial achievement if you look at the issues of the future of Iran and Syria) and she created a situation in which EU sanctions only hurt the EU.  How one can present that as a defeat for Russia is beyond me.

As for the bad old USA, they are busy sabotaging their own shale gas industry and undermining Saudi Arabia by keeping the oil prices down.  What kind of long-term strategy is that?  It is sustainable?

Finally, while the Empire still talks about sanctions, Russia is busy buying gold.  Lots of gold.

You might wonder what Kiev is doing.  Cutting it's gas consumption in half (leaving a large part of the population without heat or hot water) and stealing the pensions from the people of the Donbass.  But Kiev has nothing to worry about, Lithuania promises to help :-)

So you still think Russia is losing this one?