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Final investment decision on South Stream guarantees its construction

October 29, 2012, 20:39 UTC+3

Srbijagas Director-General noted that the initial work to lay the gas pipeline would start in Serbia in December of this year

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BELGRADE, October 29 (Itar-Tass) —— The signing by Gazprom and Serbia of the final investment decision on South Stream gives the full guarantee of its construction, Srbijagas Director-General Dusan Bajatovic said.

“A Gazprom delegation led by Leonid Chugunov, head of the Project Management Department, made a working visit to the Republic of Serbia today. A general shareholders’ meeting of South Stream Serbia AG, a joint project company created by Gazprom and Srbijagas, was held during the visit, where the positive final investment decision on the South Stream project was adopted,” Gazprom said in a statement on Monday, October 29.

“South Stream is the zenith of cooperation between Srbijagas and Gazprom. The project will get about 200 million euros annually due to this project,” Bajatovic said.

He noted that the initial work to lay the gas pipeline would start in Serbia in December of this year with the construction of two compressor stations in the area of Backo Dobro Polje.

Bajatovic stressed that South Stream would ensure energy security, stability and diversification of gas supplies to the country. As a result, Serbia would no longer be dependent on gas transit through Hungary and Ukraine.

According to preliminary estimates, the implementation of the South Stream project in Serbia will create about 2,200 new jobs and attract up to 1.5 billion euros in direct investments.

The Serbian stretch of the pipeline will be 470 kilometres and is expected to be commissioned in December 2015.

These steps are part of Gazprom’s efforts to diversify natural gas export routes by building a gas pipeline running under the Black Sea to the countries of Southern and Central Europe – the South Stream project, the company said in a press release.

Intergovernmental agreements were signed with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria in order to implement the onshore gas pipeline section.

South Stream, which will be jointly built by Gazprom and ENI, will eventually take 30 billion cubic metres of Russian natural gas a year to southern Europe.

South Stream is scheduled to become operational in 2013. The 900-kilometre-long undersea section of the pipeline will run from the gas compressor facility at Beregovaya, on Russia's Black Sea coast, near Arkhipo-Osipovka, towards the city of Burgas, in Bulgaria. The sea's maximum depth on this route is 2,000 metres.

South Stream is a strategic project for Europe's energy security and should be implemented by the end of 2015. The overall capacity of the marine section of the pipeline will be 63 billion cubic meters a year. Its cost is about 8.6 billion euro.

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