Faced with Hungary's approval of an environmental permit for the construction of the Nabucco pipeline, Gazprom may be considering moving west the route for the rival South Stream pipeline.
Reinhard Mitschek, managing director of Nabucco, announced on August 14 that Hungary was the first country to issue the project all its permits. "The granting of this permit is a substantial step forward in Hungary and signifies the advanced stage of development of Nabucco West," he said.
Within a week, Gazprom announced they were in talks with Croatia over the South Stream pipeline route. "An intergovernmental agreement between Russia and Croatia on joint participation in the South Stream project was signed in 2010," a spokesman commented. "Currently, based on the results of a pre-investment stage, Gazprom and Plinacro Ltd. are discussing the terms of a shareholder agreement for a joint compnay project with a view to its subsequent establishment."
The Croatian side is optimistic. "At the moment the chances are 50:50 that we get the transit route of South Stream," said a source involved in the Gazprom negotiations. The reasons for changing the route are uncertain. According to the Voice of Russia, a Croatian list serve, Jutarnji, listed a number of possible concerns: lower costs, differences between Gazprom and the Hungarian leadership, uncertainty over ownership shares of various Hungarian companies, and slow work on the Hungarian economic feasibility stateement. Gazprom's board chairman Alexei Miller minimized these reasons, however, calling them "not significant." An unnamed Plinacro source added that there could be no official confirmation on the status of the talks, as both sides are bound by a mutual confidentiality pledge.
Timing would indicate the talks are retribution for Hungary's cooperation with South Stream's rival, Nabucco. Whether the talks will result in the route change, or are merely a pressure tactic on Hungary by Gazprom officials, is yet to be seen.