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Russia

Gazprom Says South Stream Construction To Start, While EU Begs To Differ

Gazprom CEO Aleksei Miller is due to attend a groundbreaking ceremony near the town of Anapa on Russia's Black Sea coast on December 7.
Gazprom CEO Aleksei Miller is due to attend a groundbreaking ceremony near the town of Anapa on Russia's Black Sea coast on December 7.

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Russia's Gazprom said construction would begin this week on the underwater section of its South Stream pipeline, which will carry natural gas beneath the Black Sea and into the European Union.

But is this really the case?

Gazprom CEO Aleksei Miller announced last month that the final investment decision for the project had been reached. Miller attended a groundbreaking ceremony near the town of Anapa on Russia's Black Sea coast on December 7.

However, as Jonathan Stern, head of the Natural Gas Research Program at the Oxford Institute for Energy Studies notes, Gazprom hasn't yet ordered pipe or organized the lay barge for the pipeline and "cannot start laying the offshore section until 2014 [at the] earliest."

Moreover, EU officials say a final route has yet to be submitted to Brussels and likely won't have final approval for at least another year.

RFE/RL has also learned that EU Energy Commissioner Guenther Oettinger declined an invitation to attend the groundbreaking, citing previous commitments.

'Never Been Communicated'

Marlena Holzner, the spokeswoman for the EU energy commissioner, says this means that a final investment decision on South Stream -- a phase after all designs and studies have been completed and official approvals are in hand -- isn't even in sight.

"We have no concrete information that, indeed, the final investment decision on South Stream has been taken already because normally, if you use this term in a general sense, you would have different things established before you can say it's a final investment decision," Holzner says. "And one is that you have the route.

"To the European Commission, it has never been communicated that there is a final route. That means where South Stream starts, where it ends, and which countries the exact route goes through. That has not been done," she continues. "There is no environmental impact assessment for the whole route. As far as we can see it, we don't regard this as a final investment decision."

The proposed South Stream pipeline route, according to Gazprom
The proposed South Stream pipeline route, according to Gazprom

Gazprom says South Stream will pass through Turkish waters to Bulgaria, then continue on through Serbia, Hungary, Slovenia, and Austria to tie in with the distribution network of the multinational Eni in northern Italy.

Officials in Brussels say they see South Stream's current status as moving from the "conceptual design and feasibility" stage to the "front-end engineering and design" phase.

In the latter phase, EU legislation requires numerous tasks that need approval from regulators in each country along the route and from the European Commission itself.

February Deadline

Russia says it has concluded intergovernmental agreements needed with each EU country involved, but the European Commission hasn't yet seen them all.

The deadline for EU states to submit those documents to Brussels is February 16, 2013. The commission then has nine months to assess the agreements and raise its doubts and concerns.

A detailed plan for the entire route must be submitted to Brussels, which also must approve environmental and social impact studies by national regulators in each EU country.

A "transboundary assessment" is also required, with input from EU states adjacent to the route. All studies require consultations with the public and authorities in each country and could take more than a year to complete.

Moreover, the offshore section of the pipeline entering Bulgaria must undergo an EU environmental-impact study to ensure it complies with environmental directives.

Russian-European Chamber of Commerce President Sergei Shuklin confirmed that the December 7 ceremony at Anapa will mostly be a ribbon-cutting affair without underwater construction activity.

"Yes, yeah, I agree with that. But it starts," Shuklin said. "Actually, by this action, Russia showed they are serious about this project. They are just going to make it happen. I'm pretty sure.... So they will have the first communications with the European Commission, with the governments of the countries participating in this project. So everything will be concluded [according to EU legislation], especially [since] Russia just became a member of the World Trade Organization."

'Let's Just Do It Our Way'

So why did Gazprom rush to make its announcement?

Shuklin suggested it could be related to a probe launched in September by the European Commission into allegations that Gazprom engaged in anticompetitive practices in Central and Eastern Europe.

"Russia was actually surprised with the action related to Gazprom," he said. "And so probably, one of the reasons was, 'Yeah, let's just do it our way. We know people from the countries where we will build the pipe, and at this point, deal less with the European Union government.'"

Robert Cutler, a research fellow at Carleton University's Institute of European, Russian, and Eurasian Studies in Canada, maintains that Gazprom's push to announce the start of construction work on South Stream could also be related to domestic politics.

"On live Russian television, [President] Vladimir Putin gave [Prime Minister] Dmitry Medvedev a direct order: Construction of the pipeline should begin by the end of 2012," Cutler said. "There's a certain amount of prestige domestically invested now in producing some sort of result, even though physical construction of the pipeline probably was not in the cards then and certainly is not now.

"If Putin gives this order and Medvedev says, 'We'll do it,' but it doesn't end up happening, it raises questions domestically about their authority within the factions in the Kremlin and about Gazprom's credibility overall internationally."

According to Cutler, another reason is to give the appearance that South Stream is progressing faster than the Nabucco pipeline, a rival U.S.-backed project aimed at reducing Europe's dependence on Russian gas by linking the Caspian region and the Middle East to EU markets.
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Comment Sorting
Comments
     
by: Anonymous from: USA
December 06, 2012 17:35
Gazprom could also be making these statements in order to scare Ukraine who recently announced plans to start building an LNG facility on the Black Sea.

by: Jack from: US
December 06, 2012 19:52
and where is infamous "Nabucco" project which Washington mafia tried to push down the throats of its NATO minions?

by: Jill from: UK
December 06, 2012 20:26
@Jack

'Nabucco' is looking for investors. You volunteer?

by: Srdjan from: Serbia
December 06, 2012 23:46
Kosovo is part of Serbia, EU as UN didn't acknowledged Kosovo as a state so why is it aparted from Serbia in this map??
In Response

by: Mile from: In front of my computer
December 07, 2012 21:03
Long live Serbia with it's southern province of Kosovo and METOHIJA !!!!! Justice will prevail, sooner or latter! Srdjan, my countryman, just be patient, Radio "Free" Europe will correct this map. O by the way, congratulations to Serbs around the world for being part of this MEGA PROJECT.

by: Alex from: LA
December 07, 2012 01:59
Nabucco will never happen, Armenia won't allow it. And I don't understand why Turkey is in the South Stream, and the proposed line is longer and inefficient, Going through Ukrainian waters makes more sense.
In Response

by: Anonymous from: USA
December 07, 2012 07:50
You've missed the entire point of South Stream. To put pressure on Ukraine to sell its gas company to Gazprom. Otherwise, yes, going through Ukraine makes more sense.

by: Jack from: US
December 07, 2012 17:45
RFE/RL predicted "not so soon" for South Stream, but today the construction was officially opened with high-level representatives of EU, Germany, Italy, and Turkeys present. RFE/RL is eating its own cheap propaganda. Recall how excited RFE/RL was for Nabucco "alternative"?

by: Vakhtang from: Moscow
December 08, 2012 05:24
On the one hand it is good, that the Bulgarians and Hungarians can warm up in winter frost.
On the other hand, they should remember that if they have bad behavior, Uncle Putin can close the valve and transform poor Hungarians and Bulgarians in icicles and snowmen, that in itself not bad,because children can walk around snowmen and knock down icicles with slingshots.
The situation seems as such,that many people are ready to sell own mother for gas. Рeople do not care from whom they get gas, from Putin, Hitler, terrorists or serial killers..
It is good that Putin did not offer gas in exchange for Mr.Whitmore..Not hard to imagine what people would choose in the European Community in case of such proposal...
We see the development of a civilization, people are getting smarter and kinder....
In Response

by: Camel Anaturk from: South Ossetia
December 08, 2012 19:28
I dont know about Bulgaia and Hungary,but here in Free South Osstia they are putting up Vakhtangs for icemen and then they are doing all kinds of nasty stuff to the poor things,and you know,they like it,being the masochists they are!!! And ,yes,Vahe you are right about people selling their mothers for gas,I personally know of a certain georgian who sold all his mothers for a pittance and then it ran away to Mosscow and now writes glorious posts on RFE/RL !!! As for people getting smarter and kinder I think you must follow their example!!!
In Response

by: Vakhtang from: Moscow
December 09, 2012 08:32
As I understand camel is very upset that Putin does not supply gas to the cave of Kurdistan.
Do not feel bad camel, Ossetian bandits likes burn up kindergartens, schools and books of European authors- Goethe, Druon, Hugo, so you will not freeze ..
In Response

by: Camel Anaturk from: soon to be freed Adjaria
December 09, 2012 13:17
Vahe,dont worry about the caves of Kurdistan-here we have enough st.georgians who are constantly blowing hot air-thats the only thing patriots like you produce-and the georgians come pretty cheap,too-all they need is a bottle of stale beer and the left overs from our frugal feasts,so-no problems with heating,except we have to teach your countrymen how to use a toilet and toilet paper,too.I hope you are warm and comfortable in your luxury log cabin under the big bridge on Mosscow river-I hear 50 muscovites have already frozen to death this winter,but they didnt say where they came from-Tbilisi,Poti,Kutaisi,Gori,or just from nowhere like good old Kaka Vahe Dudu!!! Cheers from all Camels from the herd,see you on Dzerzhinsky square on December the 21th to celebrate the birth of the Greatest St,Georgian of them all-thats your spiritual mother and father and all-you know who!!!

by: Konstantin from: Los Angeles
December 08, 2012 10:33
Forever Russia does, it is the race war of Varaga,
Approved by Germani, Austria and Brits cancation
Against "Caucasian race" and Human Civilization.
The rest of EU know it is bad - nazis play "baryga".
Nabuko must ber build - to allow fear competition.

Jack and the other mouthes of Imperio makaques
Would bring-in anything - even back-door "kakas".
How evil is the pact of the Norman-Varaga "mad",
Chance to build Nabuko - they wish us all dead!

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