South Stream & Germany - Why All the Choreography?

Make the Announcement, Please

Since the summer, there has been on-going discussion of a 'German partner' joining with Russia's Gazprom, Italy's Eni Spa and France’s EDF in the South Stream gas pipeline.

In what seems to be a bizarre public relations exercise, there has been a series of rumours and denials, public banter between the Russian and Italian Prime Minister and no shortage of media speculation on the topic of German partnership.  Add to that recent harsh words from a senior Russian politician about the prospects of the Nabucco gas pipeline, the rival gas pipeline project to South Stream.

This week Stanislav Tsygankov, the head of Gazprom’s foreign projects declared “I have no doubts that a German company will become a shareholder.”

One can only assume that this has all been choreographed to cause maximum discomfort to Nabucco and/or ensure that any hesitation/resistance over German participation is swept away by momentum by this apparent fait-accompli.

That Germany would join South Stream should not come as a surprise to any observer. The country is hardly a steadfast backer of the EU's policy of energy solidarity.

Prominent German companies E.ON Ruhrgas and BASF/Wintershall. are shareholders of the Gazprom led Nord Stream pipeline and Germany initially opposed a Polish liquefied natural gas terminal at Swinoujscie which would have would directly competed with the Nord Stream (in the words of Polish Foreign Minister Radek Sikorsky, "the Molotov-Ribbentrop pipeline"), diminishing Germany’s ability to sell Russian gas to Poland.

Over the summer, German media reported that Gazprom had approached German energy company RWE, one of the six shareholders in Nabucco, with an offer to join South Stream.

The approach was reported as an attempt to weaken the European bid for more procurement diversity. However, these reports were quickly dismissed as being the result of a "misunderstanding."

Recently Wintershall Holdings Gmbh. has been named as the prospective partner, including by Eni Chief Executive Paolo Scaroni and Russian media outlets who are generally in the know about emerging developments.

But Wintershall, the oil and gas subsidiary of Germany's BASF, has repeatedly denied reports that it was seeking to join the South Stream.

But speculation about its participation makes sense; Wintershall has been cooperating with Gazprom for nearly two decades.

For Russia, Germany participation helps in their attempts to portray South Steam as ‘European pipeline’.  The fact remains that it is Russian gas that will be transited, hardly furthering EU's goal of energy security.

But enough of the posturing; let's just have the announcement and move on, please.