by Christina Nagy-McKenna, Enerdynamics Instructor

Last April as Europe was reeling from the political instability of the Ukraine and annexation of Crimea to Russia, we wrote in a blog post that “gas pipeline projects are already responding to the events in the Ukraine: South Stream is dead. Shah Deniz lives. The EU [European Union] is strategizing to reduce its energy dependence on Russia while protecting all of its members from possible energy blackmail.”

Sixteen months later much has happened:

• The relationship between the EU and Russia is layered with economic sanctions and mistrust.
• Turkey is being courted by the East and West as the critical piece to pipeline projects that each side is championing.
• An agreement between the U.S. and Iran may eventually bring Iran’s resources to the global market[1].
• Lastly, there’s the matter of the EU’s $96 billion bailout plan to pull Greece’s economy off its tightrope and into safety. 

Each of these countries may play a role in the drama surrounding Europe’s energy security, Russia’s economic security, and the pipeline projects that factor into both.

Last year’s aggressive stance toward Ukraine resulted in the EU withdrawing support from the South Stream pipeline, a project that was going to bring Russian natural gas through the Black Sea and Bulgaria to Western Europe. Instead, the EU is pursuing another project in the southern corridor of Europe called the Trans-Adriatic Pipeline (TAP) to bring in gas from the Middle East and Central Asia, including the Shah Deniz reserve in Azerbaijan. 

 In December 2014 Russia officially cancelled the South Stream project and announced a new project, Turkish Stream, that pipes natural gas from Russia to Turkey and then on to Western Europe. Regardless of Russia’s strained relations with the EU, Europe remains an important market as 70% of Russia’s natural gas comes from Europe[2]. Whether all projects can be built is questionable as market demand is not robust enough. Perhaps for that reason, Russia is purportedly scaling back Turkish Stream and is quietly negotiating to expand its Nord Stream pipeline instead.

Read more about the politics surrounding these pipeline projects in the full-length version of this article in our Q3 2015 edition of Energy Insider. 

Footnotes:

[1] Note that Iran has the world’s largest amount of natural gas reserves.

[2] “The Energy Security Dilemma of Turkish Stream,” Natural Gas Europe, August 3, 2015.