Russia isn't considering merging its South Stream gas pipeline project with the European Union-backed Nabucco scheme, Energy Minister Sergey Shmatko said Monday, refuting a proposal to do so made last week by Italy's Eni SpA (E)'s Chief Executive Paolo Scaroni.
Russia isn't considering merging its South Stream gas pipeline project with the European Union-backed Nabucco scheme, Energy Minister Sergey Shmatko said Monday, refuting a proposal to do so made last week by Italy's Eni SpA (E)'s Chief Executive Paolo Scaroni.

"Our project is stronger, and we have the agreements and the gas," said Shmatko, the Interfax news agency reported. "We are waiting for the time when the Nabucco project will be able to compete with us."

Last week, Scaroni said South Stream, a joint project between Eni and Russia's OAO Gazprom (GAZP.RS), and Nabucco are "complementary" and that they should "merge the two pipelines for part of the route" to reduce costs.

Some analysts view the two pipelines as rival projects as they both envision shipping natural gas from Central Asian states like Turkmenistan and Azerbaijan to consumers in Southern Europe .

South Stream is scheduled to transport gas from Russia and Central Asia to Europe via the Black Sea from 2015 and will cost 8.6 billion euros. The European Union-backed Nabucco pipeline will cost an estimated EUR7.9 billion and aims to ship gas from Central Asia into Austria through Turkey , Romania , Bulgaria and Hungary --bypassing Russia .

The E.U. is seeking to diversify its energy supplies away from Russian gas, after shipments were halted on two occasions due to a pricing dispute with Ukraine , a key transit state.

"Scaroni's comments look like the opening shots in an effort to shift the focus towards the commercial rather than the political," said UralSib's Chris Weafer.

The inflow of alternative energy sources and lower demand for gas in Europe amid an economic slowdown has weakened the commercial case to build both pipelines, making a stronger case for joining the projects, said Weafer.

"But, both systems also have strong--if not stubborn--political backing," Weafer added.

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