Saturday, April 13, 2024
 
 

Timchenko – South Stream’s Achilles’ Heel

- Advertisement -

A consortium led by Russia’s Stroitransgaz is reportedly a shoo-in to win a €3.5 billion deal to build a section of the South Stream natural gas pipeline across Bulgaria. Stroitransgaz is owned by Russian oil billionaire Gennady Timchenko, a long-time acquaintance of Russian President Vladimir Putin. Timchenko’s energy-trading Gunvor Group is now the fourth-largest oil-trading firm in the world.

But the US Treasury Department imposed sanctions on Timchenko on 20 March as part of broader sanctions marked an escalation of efforts to punish Putin and his associates for Russian intervention in Ukraine’s Crimean region. Timchenko was one of 20 people added to a list of individuals banned from entering the US, with any assets in the country frozen and a bar on doing business with US companies.

However, the US sanctions would not affect Timchenko business in Europe and Stroitransgaz possible involvement in constructing the Gazprom-led South Stream unless his name is later added on the EU sanctions list, which includes assets and travel bans. Timchenko owns 63% in Stroitransgaz Group via his Volga Group.

“He is barred from entering the US. But he is a citizen of the EU – he’s a citizen of Finland. So it’s a bit harder to sanction an EU citizen without proper legal procedures,” Alexei Kokin, a senior oil and gas analyst at UralSib Financial Corp, told New Europe on 28 March. “The EU might actually oppose the whole project rather than some of the contractors or sub-contractors,” he said.

Kokin reminded that the European Commission has said that some clauses and bilateral agreements between Gazprom and individual countries are against the Third Energy Package and some other EU regulations. “Gazprom probably will have to change that. Last year the EU was okay with helping Gazprom renegotiate those agreements and I’m not sure it will be ready to help,” he said. Russia’s annexation of Crimea has heightened tension between Moscow and the West, prompting the EU recently to say it planned to delay talks over the project.

The 63-billion-cubic-metre South Stream project is seen as crucial for Russia’s ambitions to strengthen its position as Europe’s dominant gas supplier. Expected to start deliveries in late 2015, South Stream will carry Russian gas across the Black Sea, bypassing Ukraine.

Meanwhile, Bulgarian media has suggested that after Timchenko’s name appeared on the US sanctions list, the Bulgarian government would feel uncomfortable – given that Bulgaria is an EU and NATO member – to authorise Timchenko to operate on Bulgarian soil.

A source close to the Bulgarian government in Sofia told New Europe on 26 March that “all references to the signed or still unsigned contract have stopped”. The source said that the actual construction might be given to another company, which is also indirectly owned by Timchenko but is legally headed by another businessman who is not on any list.

However, sources close to Gazprom in Moscow told New Europe on 25 March that the US sanctions will not affect the construction of South Stream in any way. “His assets and bank accounts (if he has any) are frozen (in US), his visa canceled. How can it ever affect the construction of South Stream in Bulgaria?” one source quipped.

Follow on twitter @energyinsider

- Advertisement -

Subscribe to our newsletter

Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

Latest

Western corporations must be held accountable for their role in China’s Uyghur genocide

In recent testimony before the Senate, U.S. Treasury Secretary...

New U.S.-Japan-Philippines Pacific bulwark established

The leaders of Japan, the Philippines, and the United...

The influence of Russia’s nuclear industry steadily expanding in Turkey

Turkey's decision last month that Russian State Atomic Energy...

Don't miss

Western corporations must be held accountable for their role in China’s Uyghur genocide

In recent testimony before the Senate, U.S. Treasury Secretary...

New U.S.-Japan-Philippines Pacific bulwark established

The leaders of Japan, the Philippines, and the United...

The influence of Russia’s nuclear industry steadily expanding in Turkey

Turkey's decision last month that Russian State Atomic Energy...

Kyrgyz “Foreign Representatives Law” enacted amid criticism

On April 2, Kyrgyz President Sadyr Japarov announced that...

EU, U.S., Uzbekistan and other partners strengthen critical raw materials cooperation

The European Union, the United States, and other Minerals Security Partnership (MSP) partners, joined by Kazakhstan, Namibia, Ukraine, and Uzbekistan, officially launched the Minerals...

The influence of Russia’s nuclear industry steadily expanding in Turkey

Turkey's decision last month that Russian State Atomic Energy Corporation Rosatom will build the country’s second nuclear power plant, most likely at a site...

Pro-nuclear leaders push atomic energy to cut CO2 emissions, boost security of supply

A global push to expand nuclear power continued recently as world leaders from more than 30 countries and the European Union met at the...

Can Innovation Diplomacy End the Climate Gamble?

With today’s global challenges urging equally global responses, an overlooked subset of diplomacy emerges as potentially pivotal: innovation diplomacy, a discipline related to the...

Eyeing competitors, OPEC+ countries will keep cutting oil production

Several OPEC+ countries are extending additional voluntary cuts of 2.2 million barrels per day, aimed at supporting what they are labeling "the stability and...

EU Parliament strives to protect energy market from manipulation

Responding to the energy crisis exacerbated by Russia's invasion of Ukraine, the European Parliament approved on February 29 legislation to tackle energy market manipulation...

Chosen to host COP29, Azerbaijan draws special attention to its energy policy

Azerbaijan’s Energy Minister Parviz Shahbazov visited the U.S. this week where he held talks with World Bank representatives, U.S. government officials and investors, discussing...

Romania sees Black Sea renewable hub, gas production growth

Ambitious projects and cross-border cooperation between the countries in the region are key in order for the Black Sea to become a renewables energy...