Russia's newly-signed gas deal with Ukraine could bolster Europe's chances of diversifying energy deliveries away from Russia through the Nabucco pipeline project, analysts say.
If Russia is to fulfill its commitments under the Ukraine transit agreement, other pipelines currently in the planning stage will have to be operated below capacity, which might make them economically unviable.
And if OAO Gazprom (GAZP.RS), the Russian gas monopoly that supplies 25% of the European Union's consumption, is forced to cut back on pipeline construction, this could free up Central Asian gas for purchase.
Problems with securing supplies from the region have, so far, been a severe obstacle to the Nabucco pipeline, which uses a route from Turkey - where it is to link with a pipeline from the Caucusus - via the Balkans to a distribution hub in Austria, thereby avoiding Russia.
"Simple mathematics show Gazprom will be unable to fulfill the transit agreement with Ukraine and fill its other European pipelines at the same time," said Mikhail Korchemkin, an independent gas analyst based in Pennsylvania.
Europe's concerns over energy security escalated after Russia's January spat with neighboring Ukraine saw natural gas shipments to the E.U. shut off for three weeks, prompting calls for the bloc to reduce its reliance on Gazprom. Hence the E.U. support for Nabucco.
But the EUR7.9 billion project has been bogged down since its conception in 2002 over financing and a lack of gas for purchase in countries such as Uzbekistan and Turkmenistan.
Whether the pipeline is constructed depends, to a large extent, on the fate of two Russian pipeline projects, the viability of which may be compromised by Gazprom's Ukrainian transit agreement.
Despite its recent trouble with Ukraine, Gazprom has vowed to maintain European gas shipments via its neighbor at 110 billion cubic meters a year. Together with existing pipelines and the proposed new routes to Germany and Southern Europe, the monopoly hopes to ramp up overall export capacity to Europe to 250 billion cubic meters by 2015.
That figure is more than one and a half times current levels and - importantly - exceeds Gazprom's own export plan to the region by 30 billion cubic meters, implying it may have to run the new links below capacity.
The two proposed Russian routes are the Nord Stream, which will pipe up to 55 billion cubic meters of gas each year under the Baltic Sea to a distribution point in Germany and which is expected to come online in 2012, and the South Stream, which will pipe up to 30 billion cubic meters a year from the Russian Black Sea coast, under the sea to a distribution point in Bulgaria and is scheduled to start deliveries in 2013.
The two pipelines will both bypass potentially troublesome transit countries like Ukraine and Belarus.
While construction hasn't begun on either, Russia insists both projects will be realized, expressing willingness to operate the pipelines below capacity if necessary.
But some analysts say not fully exploiting the new routes could make them uncompetitive.
"The prospect of export pipelines running below capacity is good news for Nabucco," said Korchemkin, who says Central Asian producers such as Turkmenistan and Azerbaijan would be able to get a much higher return from sales through the E.U.-backed route, assuming it operates at maximum capacity.
Nabucco and South Stream are, in fact, considered rival projects as both would carry around 30 billion cubic meters of mainly Central Asian gas to Western Europe from 2015.
Of Gazprom's two flagship developments, plans for Nord Stream have progressed further. Russia has yet to settle on the exact route for the South Stream pipeline and no final investment decision has been made. Also the project still awaits approval from the E.U.'s regulatory authorities.
The longer the South Stream project drags on - and the louder the cries within Europe get for new sources of energy grow - the less chance there is of the pipeline being realized.
"It's possible one of them may not be built, most likely South Stream," said Ron Smith, chief strategist at Moscow-based investment bank Alfa Bank.
That would be a major boost to Nabucco's prospects, which, skeptics say, aren't much better than South Stream's, due mainly to the difficulties in finding the gas necessary to fill it.
Moscow says the Caspian region may not hold sufficient reserves to fill Nabucco and is seeking to secure as much as it can for Gazprom.
Last week, Uzbekistan pledged all its gas production to Russia, while Turkmenistan - another Central Asian gas producer that's repeatedly mentioned as a potential supplier to Nabucco - has tentatively offered its support to South Stream.
"The problem with Nabucco is filling it with gas," Gazprom's Deputy Chairman Alexander Medvedev stressed last week.
Aside from supply problems, falling demand could also mean that only one of the two pipelines is built.
While the International Energy Agency has predicted European gas imports will grow over the next decade as the region's own production shrinks, the E.U. lowered its demand forecast to 2020 by a quarter in November, with the economy struggling and renewable energy set to gain in popularity.
In addition, despite both Russia and the E.U. insisting South Stream and Nabucco can coexist, their actions can sometimes suggest otherwise.
Following E.U. promises of political and financial support for Nabucco at a summit in Budapest last week, Gazprom responded by announcing plans to hike annual capacity at South Stream by half.
"The development of the South Stream pipeline doesn't mean we're fighting other alternative projects," Russian Prime Minister Vladimir Putin said last spring. "Our proposal is optimal and the most competitive."
But with a $20 billion price tag - more than twice as much as Nabucco - the feasibility of South Stream remains in doubt, especially as the global economic slowdown has hit Russia severely.
Some analysts say, however, Moscow sees the South Stream pipeline in essence as a political project to counter Nabucco and to expand Russian presence in the region.
"Building all these pipelines may not make sense from a strict economic point of view, but it would make sense from a strategic point of view," said Alfa Bank's Ron Smith.