The Russian-backed South Stream gas pipeline received a boost from Belgrade this week after Serbian Foreign Minister Ivica Dacic told his Russian counterpart Sergei Lavrov it is in Serbia’s national interest for the project to be built.
Lavrov said on June 17 in Belgrade he expected Serbia to begin building its leg of the Gazprom-led South Stream as planned in July, dismissing mixed signals last week about Belgrade’s commitment to the project. The Serbian section of the pipeline will ultimately have an annual capacity of 40.5 billion cubic metres while stretching for 422.4 kilometres.
“We confirmed our readiness for South Stream and the need to carry it out as it is the only realistic project for gas security in southeastern Europe,” Lavrov said after meeting Dacic in Belgrade. “All agreements remain in force and no changes have occurred,” he said. “We consider that everything will proceed as planned.”
Following Bulgaria’s announcement that it would freeze the construction of South Stream on its territory, Serbian Deputy Prime Minister Zoran Mijailovic said on June 9 that Serbia had to suspend the construction of the gas pipeline due to Bulgaria’s decision. But Serbian Prime Minister Aleksandar Vucic said later the same day that Serbia’s government has not taken a decision on South Stream.
Gazprom wants to build South Stream to ensure a reliable route of Russian gas to central and southern Europe, bypassing Ukraine. The pipeline will carry Russian gas via Bulgaria, Serbia, Hungary and Slovenia, reaching its full capacity of some 63 billion cubic metres per year by 2017. The total value of the project is estimated at some €16 billion.
But the European Commission has warned that the intergovernmental agreements between the EU transit countries and Russia may violate EU law.
However, EU Energy Commissioner Günther Oettinger said in Vienna on June 16 that a solution could be found for the project. “South Stream is a project that we indeed accept,” he said.
Alexander Kornilov, a senior oil and gas analyst at Moscow’s Alfa Bank, told New Europe on June 19 that Oettinger appears to soften his stance regarding South Stream.
Kornilov argued that the situation with Ukraine represents considerable risks to the stability and reliability of gas supplies and gas transit to Europe.
Following failed Russia-EU-Ukraine talks, Gazprom on June 16 cut off gas supplies to Ukraine as a payment deadline passed. Supply to Europe continued as planned.
“Europe has become much warmer in terms of its perception of South Stream and that means that probably now Russia has chances to discuss the potential exemption from the Third Energy Package,” the Alfa Bank oil and gas analyst said.
“Third-party access to the pipeline is possible and discussable but the question is who is going to use the pipeline besides Gazprom,” Kornilov said.
He reminded that Azerbaijan has already secured its access to the European markets through the construction of the so-called Southern corridor via the Trans Anatolian Pipeline (TANAP) and Trans Adriatic Pipeline (TAP). “Apart from Azerbaijan – from Azeri gas – I don’t really see any alternative suppliers who could be interested in using the South Stream. The situation looks similar to Nord Stream where there are no any other alternative suppliers,” Kornilov said.
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