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South Stream project is of interest to whole Europe — Serbia, Hungary foreign ministers

November 21, 2014, 19:50 UTC+3 BELGRADE
Hungary has three major interests in Central Europe: peace, reliable energy supplies and improvement of economic ties
1 pages in this article
© EPA/SERGEI KARPUKHIN / POOL

BELGRADE, November 21 /TASS/. The whole Europe has a common interest in building the South Stream gas pipeline, Serbian Foreign Minister Ivica Dacic and his Hungarian counterpart Peter Szijjarto said after talks on Friday.

“We are going to implement this project because we are convinced that it will considerably improve the safety of gas supplies to Central Europe. That is why we believe that the South Stream project is of European interest,” Szijjarto said.

According to him, Hungary has three major interests in Central Europe: peace, reliable energy supplies and improvement of economic ties. Reliable energy supplies can be achieved, among other things, through diversification of gas supply routes, Szijjarto said. He also called on Russia and the European Union to resume a dialogue on the South Stream project.

Serbian Foreign Minister Ivica Dacic, in turn, confirmed that the construction of the South Stream project is in the interests of both countries. He added that the cost of works in Serbia was estimated at more than $40 million and that the country would annually receive hundreds of million euros worth of gas transit revenues.

“That is why we insist that the European Union work out a common approach to all projects without double standards when it comes to projects that concern some other countries which are not obliged to meet the requirements that are currently being imposed on the South Stream project,” Dacic said.

He added that Serbia wants Europe to be stable and promised that Serbia which is taking over the OSCE rotating chairmanship in 2015 will do everything possible to include all the parties concerned in the solution of these problems.

South Stream is a global infrastructure project of Russia’s gas giant Gazprom for laying a gas pipeline with a throughput of 63 billion cubic meters (part of it under the Black Sea) to countries in Southern and Central Europe with an aim to diversify export routes for natural gas and warding off transit risks. The ground stretch of the South Stream pipeline is to cross Bulgaria, Serbia, Hungary, Slovenia and Austria.

In the autumn of 2013, the European Commission launched an anti-monopoly investigation into the South Stream project on suspicion that it disagrees with the rules of the EU’s Third Energy Package under which companies are supposed to separate generation and sales operations from transmission networks.

Russia-EU dispute over Third Energy Package

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.

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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