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Ukrainian crisis not to affect EC inquest re Gazprom and South Stream talks

March 10, 2014, 22:57 UTC+3 BRUSSELS
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BRUSSELS, March 10, /ITAR-TASS/. The crisis in Ukraine will not affect the European Commission’s anti-trust investigation with regard to Russia’s Gazprom, Commission spokesperson Antoine Colombani said on Monday, March 10.

He said these issues were not related.

The spokesperson for EU Energy Commissioner Gunther Oettinger also reiterated earlier in the day that the situation in Ukraine would not affect the ongoing technical talks between Russia and the European Commission on the South Stream gas pipeline project.

The sides earlier reaffirmed their commitment to resolving all disagreements between Russia and the EU over South Stream through negotiations, the spokesperson said but did not specify how much time this might take.

The inter-governmental commission will rework the agreements between Russia and six EU countries through which the pipeline will run - Bulgaria, Romania, Hungary, Croatia, Slovenia, and Austria - as well Serbia, which is not an EU member. The European Commission insists that these agreements are at odds with the Third Energy Package.

However Russia says that South Stream, as a transboundary project, does not fall under the jurisdiction of the Third Energy Package. Moreover, all these agreements were signed in and after 2008 before the Third Energy Package entered into force.

A spokesperson for the European Energy Commissioner, Marlene Holzner, said in December 2013 that the start of the work to build the South Stream gas pipeline in Bulgaria and Serbia did not run counter to European anti-trust legislation all by itself, but the agreements between Russia and EU countries on its construction were not consistent with European legislation and needed correction.

She said the European Commission would not interfere in the construction of the gas pipeline but its operation would have to comply with European requirements.

Holzner also noted that the construction of the pipeline might be complicated by growing concerns among investors and a possible refusal by banks to provide loans for the project due to the risk of legal problems in the future.

She said, however, that the European Commission was ready to provide assistance to Russia and EU southern countries in correcting and finalising the South Stream agreements.

The spokesperson named three key faults in the agreements connected with the EU Third Energy Package. The main complaint concerns the EU ban on the operation of transport energy infrastructure for companies that produce energy resources. Under the agreements, the pipeline will be operated by Russia’s gas producer Gazprom.

The second problem is that the agreements do not specify the terms of access to the pipeline for companies from third countries. The third problem is the issue of transit tariffs.

Holzner confirmed that the European Commission had sent a message to Russia on December 2, in which it recommended revising these agreements. If the agreements are not revised, the European Commission will advise EU southern countries not to use them.

Unlike Nord Stream, which runs entirely along the seabed and thus does not fall under European legislation, South Stream will be built across the Black Sea to South and Central European countries to diversify gas supplies to Europe and reduce the dependence on transit countries.

To build the onshore sections of the pipeline, Gazprom has signed agreements with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia, and Austria.

The South Stream Offshore Pipeline will run through the Black Sea from Russia to Bulgaria and have a total length of 930 kilometres. An environment impact assessment (EIA) in accordance with national environmental legislation is being conducted in Russia, Turkey and Bulgaria. In addition, South Stream Transport is undertaking an Environmental and Social Impact Assessment (ESIA) in alignment with the standards and guidelines of international finance institutions. This will involve an ESIA Report for each Sector of the Project and a consolidated document for the entire South Stream Offshore Pipeline to ensure a consistent approach.

The Russian Sector of the Project will have a length of approximately 230 kilometres, running from the landfall at the Black Sea shore to the boundary of the Russian Exclusive Economic Zone. The Russian EIA process was started in July 2012 with the publication of the Terms of Reference, which gave a first description of the subjects that are covered by the draft EIA Report. In November 2012, South Stream Transport commenced the ESIA process for the Russian Sector with the publication of a Russian Scoping Report. Public consultation meetings were held on the Scoping Report in the communities of Varvarovka, Soupsekh and Gai-Kodzor in December 2012.

The EIA and ESIA processes will be finalised before the start of offshore pipe laying in 2014, with the aim of taking the first line into operation by the end of 2015.

South Stream, initially conceived ENI and Gazprom, later joined by Electricite de France and German Wintershall AG, will eventually take 30 billion cubic metres of Russian natural gas a year to southern Europe.

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 kilometres, the maximum depth - over two kilometres and the design capacity - 63 billion cubic metres. There are two optional routes for the onshore gas pipeline section: either northwestward or southwestward from Bulgaria.

In order to feed the required amount of gas to South Stream, Russia’s gas transmission system throughput will be increased through the construction of additional 2,446 kilometres of line-pipe and 10 compressor stations with the total capacity of 1,473 MW. This project has been named South Corridor and will be implemented in two phases before December 2019.

The construction of South Stream started on December 7, 2012 is scheduled to be completed by 2015. The overall capacity of the marine section of the pipeline will be 63 billion cubic metres a year. Its cost is about 16 billion euro.

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