Gazprom shows volatility this month as Putin cancels the $40 billion South Stream pipeline but European Commission President, says it may still go ahead.
GAZPROM was trading at 141.70 on Monday 1 Dec, 145.35 next day on Tuesday, down to 143.44 on Wednesday, then reaching 146.85 on Thursday and currently dropped and trading at 142.91.
MT4 GAZPROM CHART
European Commission President Jean-Claude Juncker insists that the South Stream natural gas pipeline still has potential for realisation and accuses Russia of holding Bulgaria to ransom after Putin announced that the project is not to go ahead, as Reuters reports.
Juncker told the reporters that issues relating to the South Stream pipeline were not insoluble and that he is working on them with Bulgaria through which the pipeline is meant to run.
On Monday 1 Dec, on a visit to Turkey, Putin announced that the project is closed. The South Stream would have been a transit route for natural gas to go through the Black Sea and then through Bulgaria to Europe, the alternative to Gazprom’s traditional route through Ukraine. Russia said one of the reasons it has abandoned the project was due to lack of agreement with the EU over regulations.
Image Source: The Economist
Under the EU gas market rules, a company cannot own both the pipeline and the gas that flows in it. South Stream project demanded to be exempt from that rule, EU branded that to be illegal.
Gazprom, the energy giant of Russia, never really liked the South Stream plan. The project was costly in the already tough-enough business climate as EU gas consumption decreased, gas prices dropped and Ukraine is still to repay its debt. The slumping oil prices put a lot of pressure on the Russian economy as well, significantly affecting both corporate and public finances, thus directly affecting mostly state-owned Gazprom.
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