Russian President Vladimir Putin has given up on his dream of a southern gas pipeline that bypassed Ukraine and pumped Russian natural gas into southern Europe.  Putin is citing European Union and US economic pressure as the main reason for scrapping it.

The plan was to build the pipeline under the Black Sea, into Bulgaria; from there, it would have split off to Austria in the north and Italy in the south.  But now Putin is settling for making Turkey his partner for an alternative pipeline, with a promise of hefty discounts.  Turkey, China, and other energy-hungry nations have been snapping up long-term contracts for Russian energy supplies at bargain prices, thanks to the growing chill in East-West relations.

Bulgaria had frozen construction of the pipeline in June under pressure from the European Commission, which suggested the pipeline may violate energy and competition laws.  Sofia is now out as much as US$500 Million in annual fees that it could have charged Moscow if the project went through.

But analysts say the US$4.5 Billion that Russia has already spent on the project hasn’t been entirely wasted.  The west hasn’t bothered to build a competing pipeline in the region, because the Russian project was way ahead.