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Russia, EU to negotiate differences over South Stream

January 23, 2014, 5:19 UTC+3 BRUSSELS
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BRUSSELS, January 23, 3:07 /ITAR-TASS/. Russia and the European Union will begin on Thursday negotiations on bilateral agreements on the South Stream gas pipeline signed earlier with six European Union, Russian Permanent Representative to the European Union Vladimir Chizhov said.

“A Russian delegation led by Deputy Energy Minister Anatoly Yanovsky has arrived in Brussels to begin negotiations on these agreements with Dominique Ristori, Head of the European Commission’s General Directorate for Energy,” he said. “They will co-chair a working group of Russia and the European Union tasked to resolve the existing disagreements over the South Stream project.” Apart from that, they will discuss the situation around the European Commission’s anti-monopoly probe of Gazprom’s contracts with Eastern European countries. A representative from that company will take part in the negotiations. According to a source in the European Commission, it is expected to be Gazprom Export CEO Alexander Medvedev. The source also said that the talks will be held behind closed doors and no comments will be issued.

Chizhov said he “would not like to anticipate the results of the discussion” and say beforehand whether the agreements will be revised in accordance with the Third Energy Package as the European Commission insists.

The Russian diplomat noted that the bilateral agreements with six European Union countries, through which the South Stream gas pipeline will run, had been signed “before the Third Energy Package came into force,” which he described as “controversial” and “not the best invention of the European Union.”

“In fact, it has created more problems than solved, and the main problem is the doubtful principle of retroactive application,” Chizhov said, adding that since 2008 Russia had signed intergovernmental agreements with all countries, via which the gas pipeline will pass, including Serbia and six European Union countries, namely Bulgaria, Hungary, Greece, Slovenia, Croatia, and Austria.

“The European Commission pretended for a long time that it was unaware of South Stream,” Chizhov went on to say. “Then, at some point, having received copies of the agreements from relevant countries, the European Commission said that none of them was consistent with the requirements of the Third Energy Package. In other words, they had to be denounced or altered. As a result, six countries collectively asked the European Commission to conduct negotiations with Russia, and Energy Commissioner Gunther Oettinger agreed to do that.”

“There is still time - the construction of the gas pipeline will continue until 2016 and there is still time to find a solution,” he added.

“As a matter of fact, this situation only proves that the Third Energy Package is ‘a yoke’, primarily for the European energy sector,” he noted. “It is not accidental that when major EU energy companies start large projects they do everything they can to get a waiver from this system. Our position is that South Stream and other cross-border energy projects do not fall under the Third Energy Package in principle.”

The aggregate South Stream’s designed capacity in the first year of operation is expected to be about 16 billion cubic meters to be later increased to 63 billion cubic meters a year. Construction works have already started in Bulgaria and Serbia and will soon be launched in Hungary.

Russia and the European Union have already negotiated the subject of applicability of the Third Energy Package to the documents on South Stream. Since late 2012, a similar working group, co-chaired by Anatoly Yanovsky of Russia and Dominique Ristori’s predecessor, Philip Lowe, has managed to resolve key disagreements over waivers from the Third Energy Package with regard to the OPAL gas pipeline - a gas distribution network in Germany to be connected to the Nord Stream pipeline.

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