Iliyan Vassilev: Russia Dropped South Stream for Economic Reasons

Russia's decision to abandon South Stream was prompted by the country's current economic difficulties as well as desire to focus investment on joint energy projects with China, Bulgaria's former ambassador in Moscow Iliyan Vassilev has said.

According to Vassilev, the fall in global oil prices and the slump in the value of Russia’s currency, the rouble,“made it impossible to finance a project as expensive as South Stream.” 

In an interview with Deutsche Welle Vassilev also dismissed as 'nonsense' Gazprom’s plans to replace South Stream by another pipeline stretching from Russia to Turkey, with a gas hub at the border with EU member Greece for potential extension to the EU market.

“It's naive to believe that Gazprom will be able to get around the Third Energy Package in Greece,” Vassilev opined.

He also said Greece has no “sizeable gas depots where deliveries can be stored and redirected” and “the financing of the Adria pipeline to Italy is still up in the air.”

The EU Commission has tied construction of South Stream to Russia’s acceptance of the EU’s competition rules in the gas sector as stipulated in the bloc’s Third Energy Package.

Russia, however, insists it has already made separate arrangements for the construction of South Stream with the countries through which the pipeline was expected to pass.

Moscow had never planned to build South Stream in line with EU law, according to Vassilev.

“For that reason, Russia never appealed to have South Stream excluded from the European rules and standards,” as had been the case with the Opal pipeline, the overland section of the North Stream pipeline via Germany, said Vassilev.

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