Serbia to start South Stream construction by November

By bne IntelliNews September 29, 2014

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While the EU is still blocking plans to build the South Stream pipeline, construction outside the EU is due to forge ahead this autumn. There are plans to start building both the section of the pipeline across Serbia, and part of the offshore section linking Russia to Bulgaria within the next two months. 

The director of Serbian state gas company Srbijagas, Dusan Bajatovic, said on September 26 that he expects work on the Serbian section of the €16.6bn pipeline project to start in late October or early November, depending on weather conditions. 

Funding for the pipeline has already been lined up, Bajatovic said. Russia’s Gazprom is due to complete 60% of the Serbian section of the pipeline, with a local company to handle the remainder. A permit for the work is expected to be issued soon. 

“The capacity of the pipeline has not been changed, so it remains 41 billion cubic metres (bcm) of gas. The only changes are that the output of the South Stream in Serbia will be in Subotica, instead of near Sombor, as previously planned,” Bajatovic said at the Uniting Europe exhibition in Novi Sad. 

Since Serbia is not yet an EU member state, its government is not bound by the EU decision to halt work on the project in protest against Russia’s annexation of the Crimea. 

Meanwhile, in Bulgaria, a spokesperson for the South Stream Transport consortium, which comprises Gazprom, Eni, EDF and Wintershall, told local newswire BTA that pipes would start being laid on the Black Sea bed from November.  Again, since the pipes will be laid in Russian and international waters, this is not subject to the EU ban. 

Bulgaria, which imports almost all its natural gas from Russia, is among several EU member states keen to see South Stream go ahead. The pipeline will carry 63bcm  of gas into Southeast and Central Europe, bypassing Ukraine. Bulgaria is a crucial state on the route, as it will be the entry point for gas transported under the Black Sea from Russia. 

While former Bulgarian Prime Minister Plamen Oresharski, whose government resigned in July, reluctantly announced the suspension of construction on the Bulgarian section under pressure from Brussels, there were  signs that Sofia was quietly continuing with the project until President Rosen Plevneliev called a halt to activities on July 22, saying that all work related to South Stream should be suspended pending an agreement with the EU.

Although there are no official signs of softening from Brussels, plans for the Serbian and offshore sections indicate that Gazprom and its fellow consortium members are confident agreement will be reached with the EU. Srbjagas’ Bajatovic told journalists in Novi Sad that he was optimistic about the project. 

“I'm absolutely sure that the representatives of Europe, especially the largest countries, Germany, Italy and France, but also the countries that will benefit from the construction of this pipeline, find a common solution ... Personally, I welcome the new notes from the European Commission that discussions with Russian colleagues from Gazprom are progressing and will come to an agreement,” Bajatovic said. 

However, on September 18 the European Parliament passed a new resolution calling on EU member states to “stand up to Russia” by cancelling contracts for construction of South Stream. 

There is speculation that ongoing cuts in gas supplies to several east European countries may be an attempt to persuade EU governments to proceed with South Stream. Countries including Austria, Poland, Romania and Serbia have reported supply cuts of up to 20%, coinciding with a fall in temperatures in the region. 

 

Serbia to start South Stream construction by November

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