The development of South Stream gas transit to Europe is essential in providing energy security for Europe, but Ukraine is still a thorny obstacle that may cause disruptions, and alternative routes are needed, Russian President Vladimir Putin has said.
“We are convinced that this project will significantly
contribute to integrated energy security in Europe. It will
benefit everybody, Russia as well as the European consumers,
including Serbia,” Putin told the Serbian daily Politika
ahead of his visit to Belgrade on Thursday.
For a full transcript of the interview, click here.
The South Stream gas pipeline will deliver gas to south and
central Europe via the Black Sea and the Balkans, instead of
through Ukraine. The project is seen as critical for European
energy security. Ukraine has been an unreliable transit country,
and building a new transport grid presents less risk than using
Ukraine’s aging pipes.
“As for the future of Russian gas exports to Europe, the
problem of transit across Ukrainian territory remains. One of the
more obvious solutions might be to diversify the delivery routes.
In this regard, we hope that the European Commission will finally
make a decision in the near future about the use of the OPAL gas
pipeline at full capacity,” Putin said.
OPAL (Ostsee Pipeline Anbindungs-Leitung) is a 470-kilometer
transit pipeline, which links Russia’s Nord Stream and Europe.
Brussels and Moscow are negotiating the volume that Gazprom can
pump into the pipeline, and Gazprom wants to be the sole company
filling OPAL, which the EU says would violate its Third Energy
Package, which doesn’t allow one single company to both produce
and transport oil and gas.
A decision on OPAL is expected to be reached on October 20.
Energy deadlock
South Stream has been held up by the European Commission mainly
due to back-and-forth talks on the so-called Third Energy
Package. Other groups want to leverage South Stream to achieve
goals in Ukraine.
Both Serbia and Bulgaria have faced pressure to halt work on
the project.
“We need to resolve the deadlock concerning South
Stream,” Putin said.
Moscow broke ground on the South Stream project after securing
bilateral agreements with Austria, Bulgaria, Croatia, Greece,
Hungary, Slovenia and soon-to-be EU member Serbia. These
countries all need to come to an agreement with the EU over the
anti-monopoly law.
READ
MORE: EU gives Gazprom preliminary ‘OK’ for South Stream
gas pipeline
Strategic partners in the South Stream project are Italy’s Eni,
France’s EDF, and Germany’s Wintershall; European utilities that
want to see the project become a reality to reduce reliance on
gas deliveries from North Africa.
“We intend to further deepen our cooperation with the EU in
the energy sector, where we are natural partners, on a
transparent and predictable basis,” Putin said.
In June, Gazprom was forced to cut supplies to Ukraine after authorities in
Kiev refused to pay off its over $5 billion debt.
The South Stream pipeline will deliver about 64 billion cubic
meters to Europe, Russia’s biggest gas client. In 2013, Russia
sent 162.7 billion cubic meters of gas to Europe.
President Putin stressed that Russia has always been a reliable
supplier of energy.
“Since the beginning of the 21st century, we have
successfully implemented a number of major projects together with
our European partners. This includes Nord Stream, which is an
important factor in minimizing transit risks and ensuring
uninterrupted gas supplies to Europe,” the President said.
“Over recent months, Gazprom has been actively increasing gas
reserves in European underground storage facilities.These
measures are aimed at preventing transit disruptions and meeting
peak demand in winter,” Putin said.
On October 8, Gazprom bought Europe’s largest gas storage facility,
in the northern German town of Rehden.
Serbian investment
The Serbian portion of the pipeline will stretch 420 kilometers
and Gazprom will work together with Centrgaz to construct the South Stream pipeline through
Serbia. Gas will begin flowing through the Serbian part by the
end of 2016.
READ MORE: Russia launches South Stream gas pipeline in
Serbia
“The South Stream project will provide Serbia with more than
€2 billion in new investment and
significantly strengthen the country’s energy security,”
Putin said.
Russian investment in Serbia has already exceeded $3 billion,
most of which has been in the energy industry, particularly in
Petroleum Industry of Serbia, a once-defunct company that is now
a major contributor to the state budget. Serbia’s rail
infrastructure is also getting an upgrade with the financial
support of Russian Railways.
Serbia and Russia are strong economic partners; Russia is
Serbia’s third largest foreign trade partner, after the EU and
non EU-aligned countries in Southeast Europe. Trade in 2013
reached $3 billion. Russia and Serbia have had a free trade
agreement since 2000. Twelve percent of Serbian imports come from
Russia.
Bypassing Ukraine
Russia’s main motivation in the Nord and South Stream projects is
to cut Ukraine out of the energy equation to ensure uninterrupted
deliveries to Europe.
The last round of trilateral gas talks, held in Berlin on
September 26, concluded with a plan that Naftogaz, Ukraine’s national oil and gas
company, will pay off at least $3 billion of Gazprom debt by end
of 2014, and then Russia will resume gas deliveries.
READ MORE: Ukraine’s pipelines
will lose 50% of value when South Stream starts – Naftogaz
head
Russia supplies about a third of Europe’s energy needs, about
half of which travels via Ukraine.
Another compelling reason for South Stream is it being a new
pipeline, instead of Ukraine’s outdated transit system, which
Gazprom estimates would cost as much as $19.5 billion to upgrade.
The South Stream project is estimated to cost $45 billion, but
will factor out risky Ukrainian politics in delivery.
Article source: http://rt.com/business/196392-south-stream-putin-serbia/
Speak Your Mind
You must be logged in to post a comment.