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EU to discuss preferences for South Stream project only as part of Third Energy Package

September 23, 2014, 17:41 UTC+3 BRUSSELS
If Russia requests exemptions for the South Stream gas pipeline project but only as part of the Third Energy Package, the European Commission is ready to discuss this issue, an EU spokesperson says
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© ITAR-TASS/Ruslan Shamukov/Archive

BRUSSELS, September 23. /ITAR-TASS/. The European Commission is ready to discuss possible preferences for Russia’s South Stream gas pipeline project only as part of the EU’s Third Energy Package, an EU spokesperson said on Tuesday.

EU Energy Commissioner Guenter Oettinger’s spokeswoman Marlene Holzner said the South Stream issue could be raised at the upcoming gas price talks between Russia and Ukraine with the EU’s mediation in Berlin on Friday.

If Russia requests exemptions for the South Stream gas pipeline project but only as part of the Third Energy Package, the European Commission is ready to discuss this issue, Holzner said.

South Stream project

South Stream is Gazprom's global infrastructure project designed to build a gas pipeline with a capacity of 63 billion cubic meters across the Black Sea to Southern and Central Europe in order to diversify natural gas export routes and eliminate transit risks.

Infographics Russian gas in Europe Russian gas in Europe
One-third of gas consumed in EU comes from Russia. Infographics ITAR-TASS

The construction of the South Stream pipeline started in late 2012. Under the project, the first deliveries are due in 2016 and the pipeline is expected to become fully operational in 2018.

Last year, the European Commission urged to review bilateral intergovernmental agreements between Russia and EU countries to ensure that they comply with the Third Energy Package, which requires the separation of gas production, transportation and sale to prevent gas suppliers from dominating the infrastructure.

Russia insists the South Stream project should be exempt from the effect of the Third Energy Package because it signed bilateral inter-governmental agreements with the EU countries participating in the construction of the gas pipeline on their territory before the EU’s new energy legislation came into force.

Therefore, Russia says that the European Commission’s requirement to adapt these documents to the Third Energy Package contradicts the basic law principle that legislation cannot have retroactive force.

Third Energy Package

The Third Energy Package requires, in particular, that a half of the capacities of the pipeline built with Russian money must be reserved for independent suppliers, i.e. for cheap and free transit of Caspian gas to Europe independently from Russia.

Therefore, Russia does not recognize the legitimacy of applying the Third Energy Package to the South Stream gas pipeline project. If Moscow agrees to the EU’s proposal to consider exemptions for the South Stream gas pipeline as part of the Third Energy Package, this will mean that Russia will de facto recognize the legitimacy of using this ultra-liberal regulation.

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