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EU demands to revise South Stream agreements

December 06, 2013, 12:43 UTC+3 World Service) ¶ 6/12 Tass ¶ ¶ EU demands to revise South Stream agreements ¶ ¶ The European Union demands from Russia to revise the principle to control the South Stream gas pipeline

These are agreements with Bulgaria, Serbia, Hungary, Slovenia, Croatia, Austria and Greece

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MOSCOW, December 06. /ITAR-TASS/. The European Union demands from Russia to revise the principle to control the South Stream gas pipeline, which is under construction, the Vedomosti writes. It may make it impossible for Gazprom to halt gas transportation across Ukraine.

The intergovernmental agreements between Russia and European countries, across which the South Stream pipeline is planned to lie, do not conform to the European Union's laws and must be revised, the newspaper cites European Commission director for energy markets Klaus-Dieter Borchardt as saying. These are agreements with Bulgaria, Serbia, Hungary, Slovenia, Croatia, Austria and Greece, he said. If Russia refuses, the European countries should themselves abrogate the agreements. If they do not do this, the European Commission will find ways and means to oblige them, Borchardt warns.

Under the agreements, only Gazprom will own and control the pipeline, set tariffs and pump only Russian gas through the South Stream pipeline, the daily notes. This is contrary to the EU law, EC official Marlene Holzner said on Thursday. According to her, the European regulations oblige Gazprom to ensure access to the gas pipeline for third suppliers, and piping tariffs must be set by an independent manager in coordination with a regulator.

Borchardt said EU energy commissioner Gunter Oettinger had proposed Russian Energy Minister Alexander Novak to revise the agreements. A ministry official confirmed the letter was received and an answer was being prepared. Russia is against this, a high ranking source in the government told the Vedomosti. The intergovernmental agreements mainly were signed in 2008, before the Third Energy Package came into force, he explained.

For the present, Austria and Greece have quitted the project. The South Stream route will lie across the Black Sea bed from Russia's Anapa to Bulgaria and across Serbia, Hungary and Slovenia to Italy with branches to Croatia and Bosnia and Herzegovina. The construction of the underwater section began in December 2012.

A Bulgarian Energy ministry official told the Vedomosti that the country would follow the EU regulations in the South Steam project. Representatives of the Croatian, Serbian and Slovenian governments did not reply.

A Gazprom official declined to comment. A source close to the company said Gazprom did not intend to take any steps so far. "Let's wait whether concrete actions will be taken," he said.

Russia's position is the following — the intergovernmental agreements were concluded on the basis of the international law and they are of more priority than the EU legislation, said a professor at University of Oil and Gas, Andrei Konoplyanik. But if Russia refuses to obey to the Third Energy Package, the South Stream project may have the fate of the North one and remain half-empty after the startup, he noted. The South Steam capacity is expected to reach 63 billion cub/m, and the cost is estimated at €16 billion.

It is still possible to implement the South Steam project, Konoplyanik believes. The Third Package is a number of framework documents, but work on documents to regulate the mechanisms is still under way. How the South Stream will function will depend on how the documents are formulated, the expert noted.

Itar-Tass is not responsible for the material quoted in these press reviews

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