Putin's South Stream gamble might lead to a strategic loss in South East Europe

One more economic explanation behind Putin's move on the South Stream.
After Eni's threat to pull out of the South Stream JV the bank consortium supposed to finance the project told Gazprom that it will be unable to provide project funding.
Former Eni CEO and long time friend of President Putin Scaroni made an important disclosure - after two years in vain attempting to strike a bargain with the EC and green light the South Stream - Putin simply tried to preempt the negative effect of yet another blow to his economic and financial all mightiness. The Russian president stated the obvious offering his interpretation and staging a counter offensive in a PR format.
Here is the most important part of Mr. Scaroni's statement - without EC's clearance it would be impossible to activate the South Stream banking consortium which was supposed to finance 75% of the project cost. In Scaroni's opinion under the current economic circumstances Gazprom is unable to foot the bill on its own.
Paolo Scaroni is an insider, worked for quite some time closely to Putin and his interpretation should be taken at face value.
Putin's move is therefore a carefully calculated move to capitalize on the demise of a doomed project.
Miller's statement of a change in strategy on the EU market is more of a crisis management effort rather than well thought off and elaborate move. It is meant to serve a higher place strategic play that Kremlin plays against the West.
The Ankara declaration tries to
- fuel public discontent and mass scare for cold winters ahead and huge losses in original South Stream countries on billions of dollars, jobs and profit losses that were never meant to happen in the first instance.
- put pressure on the European commission to offer short and midterm solutions to EU member countries relying on transit through Ukraine in the event of gas supply cuts – this winter and in the future. Putin’s move makes gas shortage in CEE and SEE this winter more, not less likely.
- play the ’strategic partner’ Turkey card against the EU – turn Turkey into a Germany type hub distributing Russian gas, sparing Gazprom problems in dealing with individual countries. It is however unlikely that Turkey will play the role envisaged in Mr. Putin’s plan.
Vladimir Putin is as usual good on tactics and short on strategy. Rather inadvertently he has dealt a mortal blow to Gazprom, pushing the EU and all CEE and SEE countries in forced ‘war time’ mode of diversification and alternative supplies solutions.
In theory the idea of selling Russian gas at Turkish border is great, but there is no certainty that Russian gas will reach that far without a investing in separate infrastructure from the TANAP and that Gazprom will be more successful in rising financing for new land gas pipelines in Turkey. It is unlikely that Russian gas will remain competitive versus Azeri, Iranian, Iraqi Kurdistan and other gas at the border gas hub as not only it is the most expensive to produce at well – but also most expensive to transport to the hub. Russian experts have referred in the past at $265 for 1000 cubic meters as the lowest possible price effectively the price President Putin offered his ally Yanukovich to avert Ukraine’s EU drive.   
Without dramatic increase in gas storage capacity in Turkey (unclear at this stage) gas transit will likely face congestion and crowding effect in view of limited local demand and lack of identified long term demand and transit route to the only market that warrants large scale project transit capacity – Italy. With Eni’s loss of enthusiasm for sharing exorbitantly high capex on large scale infrastructure such as the present South Stream and many better cost-benefit options – delivery to Turkish border of large quantities of gas will not make sense unless Gazprom guarantees itself access to the Italian market, which will be already short of the supplies via Ukraine.
Using TAP makes sense as the pipeline already enjoys derogation from Third energy package but it is unlikely that the EC will remain sympathetic.
At this point in time there is little chance that Greece will be more successful that the South Stream countries in obtaining exemptions for Gazprom from the EC.  
Gas price competition will be fierce at the hub near the Turkish border but this will only make gas traders more and more dependent on exit routes to Greece and Bulgaria.
If and should Gazprom choose to cut all transit through Ukraine that will effectively kill Gazprom share in major markets such as Hungary, Austria, Slovakia and Italy as well as transit through Romania and Bulgaria (the $100 billion transit fee losses that Gazprom plays to the ear of proponents of the South Stream project in Bulgaria). It remains to be seen how Gazprom will tackle this early cancellation of the gas transit agreement between Gazprom and Bulgartransgaz which expires in 2030.
Gazprom’s current move could easily backfire as the said transit infrastructure will instantly be made available for deliveries to Ukraine, Moldova and the whole region of Central and South East Europe. Free from Gazprom’s presence the market and transit capacities will be up for grabs for its main competitors.
At the end of the day the strategic consequences of Putin’s gamble on the South Stream might prove to be disastrous to Gazprom leading to a permanent loss in market shares and decisive move of the EC and all national governments in the regions to seek more predictable alternative gas supplies and alternative solutions to Russian politically motivated gas supplies leading to strategic loss of influence of Russia in the region.
The law of unintended consequences