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No decision to halt South Stream gas project yet — Serbian prime minister

June 09, 2014, 15:34 UTC+3 BELGRADE
Aleksandar Vucic commented on Deputy PM Zorana Mihajlovic’s statement saying on Monday that Serbia had to suspend the construction of the gas pipeline due to Bulgaria’s decision
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Serbian Prime Minister Aleksandar Vucic

Serbian Prime Minister Aleksandar Vucic

© EPA/KOCA SULEJMANOVIC

BELGRADE, June 09. /ITAR-TASS/. Serbia’s government has not taken a decision on the South Stream project, Serbian Prime Minister Aleksandar Vucic has said.

The prime minister commented on Deputy PM Zoran Mijailovic’s statement saying on Monday that Serbia had to suspend the construction of the gas pipeline due to Bulgaria’s decision.

Serbia will have to postpone the laying of the Russia-led South Stream pipeline after Bulgaria froze the construction of its segment, Serbian Minister for Construction, Transport and Infrastructure Zorana Mihajlovic said Monday.

“Bulgaria is a hub and therefore, until Bulgaria’s negotiations with Brussels and the EU negotiations with Russia finish, we cannot move forward. But nevertheless, the results of both scenarios will mean the postponement of works in Serbia,” she said.

For his part, Serbian Minister for Mining and Energy Aleksandar Antic said the South Stream future depended on the European Commission’s agreement with the EU and Russia.

“The South Stream project is an important energy project for Serbia. But Serbia is only one of the states that the pipeline will run,” Antic said.

“In addition, besides Russia, we are the only non-EU member country,” he said.

Kommersant business daily said that Bulgaria has suspended the construction of its section of the South Stream, which was supposed to carry Russian gas to the EU bypassing Ukraine, after its prime minister’s meeting with US senators John McCain, Ron Johnson, and Chris Murphy.

If built, the South Stream pipeline will nullify the value of the Ukrainian gas pipeline system.

The Ukrainian Energy and Coal Industry Ministry has proposed splitting the national pipeline operator Naftogaz into five independent companies and to rent the pipelines to a consortium comprising several US and the EU companies, First Deputy Minister Igor Didenko said.

According to Didenko, the new companies will remain state-owned and they will establish at least two joint ventures with US and EU corporations. Kommersant said Kiev is talking with Shell, ExxonMobil, and Chevron about whether these companies could buy stakes in the Ukrainian gas pipeline system.

President Vladimir Putin said earlier that Russia will seek other ways to lay the pipeline, if the EU bans the construction of the South Stream, including laying it across Turkey.

 

Bulgaria suspends South Stream

After talks with US senators on June 8, Bulgarian Prime Minister Plamen Oresharski ordered the construction of the South Stream project to be suspended. The EU authorities ordered a freeze on the project.

“After additional consultations with Brussels we’ll determine further works,” he said.

Last Thursday, June 5, Serbia announced it had no plans to delay the start of construction, scheduled for July, over the pressure from the EU.

The South Stream project has faced a number of problems since relations between Russia and Europe soured over Ukraine.

Gazprom said it could complete the South Stream pipeline without international funding.

Meanwhile, Bulgaria's Minister of Economy and Energy Dragomir Stoynev says he is convinced that the South Stream project plans to pipe gas under the Black Sea to Bulgaria and then ashore for onward transit to Greece, Italy and Austria will be implemented.

“South Stream looks like an irreversible European project. The question is not whether it will be implemented or not, but in what way it happens,” said Stoynev on Monday, currently on a visit to China. “Over one year of work, I have accomplished my task and I have taken the South Stream project to a new level. No one challenges the implementation of the South Stream project or its necessity now.”

 

The South Stream project

Gazprom’s $45 billion South Stream project, slated to open in 2018 and deliver 64 billion cubic meters of natural gas to Europe, is a strategy for Russia to bypass politically unstable Ukraine as a transit country, and helps ensure the reliability of gas supplies to Europe.

Serbia imports about 2.5 billion cubic meters of gas per year, most of which comes from Russia via Hungary and Ukraine.

The project stipulates for the offshore gas pipeline section to run under the Black Sea from the Russkaya compressor station on the Russian coast to the Bulgarian coast. The total length of the offshore section will be around 900 kilometers, the maximum depth - over two kilometers and the design capacity — 63 billion cubic meters. There are two optional routes for the onshore gas pipeline section: either north-westwards or south-westwards from Bulgaria.

The 900-kilometer-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 meters.

South Stream is a strategic project for Europe's energy security and should be implemented by the end of 2015. Work is currently underway to draft a feasibility study for the marine section across the Black Sea and the surface section running through transit countries.

The overall capacity of the marine section of the pipeline will be 63 billion cubic meters per year. It is worth about €8.6 billion.

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