Russian Government Confirms South Stream Will Begin This Year

The press office for Russian President Vladimir Putin has confirmed that construction on the South Stream pipeline will begin in December this year.

In an official statement reported by the Reuters news agency last night, the press office said that the construction of the pipeline would begin by the end of the 2012.

"Gazprom and Eni aim to make the final investment decision (FID) on the offshore part of the project in November and start the construction in December," the statement read.

The timeline for the beginning of the construction of the pipeline coalesces with a statement made by Serbian President Tomislav Nikolic's press office to Bloomberg last week which said that the country expects construction to begin on the Serbian leg of the pipeline this December. The construction will be undertaken by Serbian oil company Naftna Industrija Srbije (NIIS) of which Gazprom Neft is a majority shareholder. Gazprom Neft's parent company Gazprom is also the majority stakeholder in the South Stream pipeline with a 50 per cent stake.

While the timeline for the construction of the pipeline offered by the Russian President press office's reinforces that of the Serbian presidency, the estimated timeline for the FID contradicts that expected by minority shareholder Eni which holds a 20 per cent stake in South Stream.

Last week, CEO of Eni Paolo Scaroni said that he expected an FID to be taken next year. On the sidelines of a shareholder meeting last week, the CEO told reporters that expected an FID to be taken in early 2013.