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26 Nov, 2009 14:15

EU parliamentarians talk up South Stream

Electricite de France is expected to sign an agreement on the South Stream gas pipeline with Gazprom during Prime Minister Putin's visit to Paris. The deal may reflect shifting European opinion on the project.

Attitudes towards building of the South Stream pipeline in Europe look to be changing dramatically. As an example of the new enthusiasm, a group of EU parliamentarians went to Siberia to see where the gas would come from to fill the pipeline.

The Yamalo-Nenets region is home to the deposits which are the present and the future of Russia's gas industry. Despite decreased demand for gas, falling prices and gloomy forecasts, Gazprom is actively tapping new fields to meet future demand, according to Aleksandr Koryakin, Head of the Oil and Gas production unit, Gazprom Dobycha Yamburg.

“We can produce 105 billion cubic meters of gas annually. And we are planning to increase it to 115 billion cubic meters. This will enable us to extract enough gas for South Stream.”

Russia has been trying for years to get the project underway but has met considerable resistance. Bulgaria provided an unpleasant surprise this summer by freezing its involvement with Moscow's project in favor of the European backed Nabucco pipeline which aims to get gas from the Caspian sea states.

But now Sofia is signaling it is ready to make a U-turn, according to Petar Kanev, Advisor to the Bulgarian President.

“All the gas we are getting goes through Ukraine. Last year we suffered immensely when gas stopped flowing in. That's why Bulgaria wants South Stream to become a reality.”

The Organization for Security and Co-operation in Europe also says it's ready to throw its weight behind the project, according to OSCE Parliamentary Chairman, Joao Barroso Soares.

“South Stream is one of the most important projects that is being done. And of course we are in favor of the security of all the main routes of the gas that comes from Siberia.”

At a cost of $9 billion, the mammoth construction task will require the combined efforts of many governments and companies to succeed. Gazprom cannot do it alone. After a difficult start, the participants are beginning to line up, and the potential completion date of 2015 now seems less of a pipe dream.