European Commission Pushes Renegotiations On Proposed South Stream Pipeline

January 2014, Vol. 241 No. 1

The European Commission called for European Union member states to renegotiate the terms of their agreements with Gazprom on the South Stream natural gas pipeline, saying some aspects of the project were unlawful.

Gazprom’s plans to operate the planned pipeline, supply the gas passing through it and establish tariffs are in violation of EU law, said Marlene Holzner, spokeswoman for the EU energy commissioner.

“We believe that in the European energy market, gas security and also competition is best served if there is not one company importing and producing gas, owning the pipeline and fixing the tariff,” she said, adding that other companies, including from Germany and France, should also be allowed to supply the gas. According to EU law, an independent managing company should set the tariffs, which should be confirmed by a state regulator.

Gazprom Deputy Chairman Alexander Medvedev has said that all 63 Bcm that will flow through the link had found buyers. South Stream, which is set to pass from the Black Sea to southern and central Europe, is expected to begin commercial operation in 2016, with its full annual capacity to be reached in 2018. It is planned that the pipeline will go through Austria, Bulgaria, Hungary, Greece, Slovenia, Croatia and Serbia.

Construction of the Serbian leg of South Stream gas pipeline has gotten underway as a steel pipe was symbolically welded north of Belgrade. Serbian President Tomislav Nikolic, Prime Minister Ivica Dacic, Russian Energy Minister Alexander Novak and Gazprom CEO Alexei Miller watched the welding ceremony in a live video broadcast from the Serbian capital. The Serbian section of the pipeline will stretch to about 450 kilometers and cost about 1.9 billion euros ($2.6 billion). Gazprom is expected to pay for all construction costs related to the Serbian section. Russia and Serbia planned to lay pipelines to supply South Stream gas to Bosnia and Herzegovina, Macedonia and Kosovo.

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