• Natural Gas News

    Stakeholder Cooperation to Ensure South Stream Goes Ahead as Planned

Summary

The relationship between the European Union and Russia is central for a successful South Stream project. That is the overall message of the conference “South Stream: The evolution of a pipeline.”

by: Sergio

Posted in:

Natural Gas News, News By Country, , Italy, Russia, Pipelines, South Stream Pipeline, Featured Articles

Stakeholder Cooperation to Ensure South Stream Goes Ahead as Planned

The relationship between the European Union and Russia is central for a successful South Stream project. That was the overall message of the conference “South Stream: The evolution of a pipeline,” which took place in Milan.

Russian, Italian, Hungarian, Serbian and English pundits took part to the conference hosted by Natural Gas Europe | Gas Dialogues, confirming the relevance of the multi-billion euro project.. According to the panellists, the South Stream would increase security of supply and promote diversification of energy sources. 

“Besides enhancing the energy security for Italy … it will create jobs, it will foster investments in Italy,” said Russia’s Deputy Minister of Energy Anatoly Yanovsky, adding that the gas supplied by South Stream will be needed in Europe.

Yanovsky’s comments paved the way for a discussion about the role of Italy and the European Union.

The EU Energy Commissioner Günther Oettinger recently said that the South Stream pipeline project does not qualify for EU propriety funding. It does not fulfil the criteria for receiving the designation of “Project of Common interest,” which would allow for accelerated planning approvals, as well as potential funding from the EU. 

During the conference, Russian authorities stressed the relevance of the cooperation between Brussels and Moscow, asking the European Commission to be more receptive. The intervened stakeholders asked for cooperation to add pressure on Brussels. 

“We must join our forces so that the project is considered of European importance,” said Yanovsky commenting the project.

According to the Deputy Minister, the pipeline will be a long-term solution to ensuring a secure energy supply to all European citizens. Local governments clinched agreements with Gazprom, convinced that the new pipeline could ensure benefits for the involved countries, but the resistance of Brussels does not help.

“In the last couple of months all the Intergovernmental Agreements of the South Stream participant countries have come under criticism from the European Union on the Third Energy Package,” said Reka Szemerkenyi, Advisor to the Hungarian Prime Minister. 

“We have to work together with participation from Russia, the EU and the country participants to ensure South Stream goes ahead as planned,” added Szemerkenyi. 

The European Union’s Third Energy Package is a legislative package for an internal gas and electricity market in the EU. The package, entered into force in 2009, seeks to “unbundle” ownership of natural gas production and transmission lines. The leading principle of the directive is to grant equal access of all participants to infrastructures. 

Last year, Gazprom Export Alexey Golubnichiy said that the Russian company was seeking an exemption from the legislative package, although the “main problem is that giving us such exemptions will take from four to eight years, and this is too long for South Stream.” 

Negotiations continue in Brussels, with Russia leading the group of the involved countries. Also East European countries are determined to make it happen. 

“We now have to work together with participation from Russia, the EU and the country participants to ensure South Stream go ahead as planned,” said Szemerkenyi.

The South Stream pipeline will be ready to pump full capacity at the end of 2017, South Stream Transport BV Chief Executive Oleg Aksyutin said on the sidelines of the conference. The pipeline will end up in Tarvisio, in Eastern Italy. 

RUSSIA-ITALY COOPERATION

 The conference addressed the extent of the cooperation between Russia and Italy in the energy sector. Managers of involved companies and politicians underlined the deep relations between the two countries.

“Russia and in particular Gazprom is the foremost supplies of energy in Italy and next year we will celebrate 40 years of energy provision and commercial relations between Gazprom and Eni,” remarked Yanovksy. 

Italy’s Eni and Gazprom are working together on the South Stream project. They signed an agreement in 2007 to cooperate on the offshore part of the pipeline, the section travesing the Black Sea connecting Russia to Bulgaria.

“Half of this capacity is for Italy. The offshore section of the pipeline will be 30% financed by partnership between Gaprom, Eni, EDF and Wintershall and 70% will be raised by the market,” said Aksyutin. 

The 2385-km-long pipeline will have a total annual capacity of 63 million cubic metres of gas. Italy, which imports mainly from Russia and Algeria, will consume half of the gas supplied by the new pipeline. 

“Given the slowdown in Algerian gas flows, for Italy the only realistic alternative is Gazprom,” Alexander Syromyatin, Deputy Head of Gazprom’s project management department, said in Milan. 

ITALIAN POPULATION 

According to a research by World Thinks, 41% of Italians endorse the South Stream project, with 24% in opposition.

The study indicates that people see positively the construction of the pipeline, as it could create jobs and at the same time decrease gas prices. On the other hand, some segments of the Italian population seem reluctant to give the green light to the South Stream as they hypothesize an increased reliance of Italy on Russian gas.

The report also suggests that Eni and the European Union are the only two ones entities perceived to be serving the interests of the Peninsula. The instability of Italian political situation is indeed related to a positive perception of European authorities.

The future of South Stream is clearly more dependent on Brussels than on Rome. Italian political disarray implicitly deprives many governmental building of their functions and their powers. The important decisions will probably be taken in Brussels, also in the energy sector. 

The conference is the third in a series examining the South Stream project organised by Natural Gas Europe, following events in Sofia and Belgrade. Conferences will take place in the coming months in Ljubljana, Budapest and Brussels.

Sergio Matalucci