Falling oil prices and Western pressure have forced Russia to cancel South Stream, according to an article published in the online edition of The Economist.

Highlighting that Russia’s cancellation of the pipeline project “has taught its friends a lesson”, the article describes South Stream as an attempt by Moscow to “regain sway in south-eastern Europe”.

Russia’s plan to transport gas under the Black Sea to central and southern Europe has attracted “a host of supporters, including traditionally Kremlin-friendly countries (Austria, Bulgaria, Italy and Serbia) as well as Croatia, Slovenia and Hungary”.

But it also was a challenge to the authority of the European Union, which has repeatedly said the project violated its regulations for liberalisation of its energy market.

Then, Russia’s President Vladimir Putin announced Moscow was dropping South Stream, in an U-turn that “infuriated his allies and mystified everyone else”.

According to the article, the recent decline in oil prices, the project’s business case dwarfed by its “political rationale (bypassing Ukraine and buying influence in Europe)" as well as decreasing EU gas consumption and increasing competition from other gas suppliers have all been reasons for Russia to cancel the project.

Julian Popov, a former Bulgarian politician and an energy expert, opined that another reason is that the “EU pressure on member countries has worked”, with Bulgaria changing “its energy policy (and its government)” following intensive lobbying from the EU and the US, the article said.

While the Russian President may hope that the European countries “will vent their frustration on Brussels” over the loss of potential benefits from the project ”it is more likely that his erstwhile friends will learn a different lesson,” the article concludes.

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