Russia: Bypassing Croatia with the South Stream Pipeline

Russia's decision to bypass Croatia as a transit state for the South Stream natural gas pipeline is not entirely surprising. Croatia has been very active in planning the construction of an import terminal for liquefied natural gas on its shores, a project that would bolster its energy independence from Russia and possibly transform Croatia into a Balkan energy hub. Gazprom's decision to bypass Croatia in favor of landlocked Hungary allows the Russian energy giant to maintain its leverage over the transit states along its strategic pipeline routes to Europe.

Croatian President Ivo Josipovic and Gazprom Deputy CEO Alexander Medvedev independently verified Gazprom's choice Nov. 5. Days earlier, on Oct. 31, Hungary approved a final investment in the project and gave the South Stream pipeline the status of a project of national significance. In response to Gazprom's decision, Croatia will focus its efforts exclusively on building its own LNG import terminal, as evidenced by Josipovic's upcoming trip to Qatar, the world's largest LNG exporter.