Bulgaria, Serbia deals boost Russia's gas plans for Europe

(MOSCOW) - Russian gas monopoly Gazprom scored two major successes this month in a bid to secure its position as Europe's dominant gas supplier, with pipeline deals in Bulgaria and Serbia, analysts said.

The deals guarantee transit rights for the planned South Stream gas pipeline, a joint project between Gazprom and Italy's ENI that will run under the Black Sea from Russia to European markets.

Details of the agreement with Serbia are due to be announced on Friday when Serbian President Boris Tadic and Prime Minister Vojislav Kostunica will travel to Moscow for talks with Russian President Vladimir Putin.

"From the standpoint of the battle for control of export routes of hydrocarbon, Gazprom and Russia made a very important step forward in this battle," said Maxim Shein, an analyst at Broker Credit Service in Moscow.

"Because nowadays the central point of any political, economic influence and stability is not to control the resource base but to control the transportation routes," Shein said.

The South Stream pipeline, like the planned Nord Stream pipeline between Russia and Germany, is aimed at reducing Russia's reliance on transit routes through Belarus and Ukraine.

Gazprom has been involved in repeated disputes with Belarus and Ukraine over transit. In the latest development, Ukrainian Prime Minister Yulia Tymoshenko on Wednesday said she planned to raise the tariffs for Russia.

South Stream is also seen as a rival to the Nabucco pipeline, a project backed by the European Union and the United States to pump gas from Azerbaijan and Central Asia to Europe, bypassing Russia.

But analysts said the two projects could eventually coexist.

"It is theoretically possible for both of them to exist. I think for Gazprom the object is not so much to derail Nabucco but to diversify current export routes," said Alexander Burgansky from Renaissance Capital, an investment bank.

Shein said the South Stream project showed the mutual energy dependency between Europe and Russia, adding that the pipeline had little to do with politics and more with business.

"Of course, both Russia and the EU want to be in some kind of control, influence, therefore all the necessary projects will be accompanied by scandals," Shein said.

"But the truth is that business is the primary goal of all these projects, for both Europe and Russia... I think in the long run Russia and European countries will be good business friends."