EU Commission: Ready to Discuss Solutions in South Stream Negotiations

BRUSSELS, December 5, 2013 /PRNewswire/ --

A constructive discussion took place yesterday at the European Parliament at a conference entitled "South Stream: The Evolution of a Pipeline", hosted by Natural Gas Europe, where representatives of Gazprom and the European Commission discussed potential ways forward on the application of EU legislation to the South Stream pipeline.

The event heard that by 2030 Europe's natural gas needs are anticipated to grow by 25%, of which 80% will be imported. Faced with the prospects of diminishing domestic production and uncertainty about regulatory and environmental aspects of commercial unconventional development, Europe requires security of supply. The two-hour debate discussed the role of the pipeline in economic stimulation, security of supply, diversification of energy sources and its key position in the development of a strong partnership between the energy enterprises of Europe.

Stressing the importance of the pipeline, Deputy Chairman of the Management Committee and Director General of Gazprom Export, Alexander Medvedev emphasized that, "South Stream is a flagship project, which will provide our European partners with new gas reserves from Russia and the possibility to export 63 billion cubic meters of gas, alongside direct investments, tax revenues and the creation of new jobs. It will open a new chapter of time-tested cooperation, helping spread energy security responsibly to more customers. More importantly, South Stream will integrate gas markets in the region - it is a Pan-European project which will connect, not divide, people and economies."

The European Commission has always emphasized that it will enforce the terms of the Third Energy Package. However,the Director of the Internal Energy Market at DG Energy, Klaus-Dieter Borchardt, stressed that exemptions for unbundling obligations have not been ruled out. He said that South Stream will not operate in the EU if it is not in compliance with EU energy law, as expected of all energy operators, but stated that he was ready to discuss a range of options.

"It will not be an easy task. It needs a lot of mutual understanding and possibly some new ideas that have yet to be discussed. The Commission is open to looking at this infrastructure and will contribute to its realisation, but we all need to find a solution and the Commission is willing to play its part."

South Stream, which is to run 2385 km long and will involve the partnership of 9 countries, including Bulgaria, Serbia, Hungary, Italy and Russia, has required substantial agreements between governments and major energy enterprises. Russia is the most important commercial energy partner for Europe and has always represented a sure, stable supply of gas for many European countries, with Gazprom supplying over a quarter of the European market.

Anatoly Yanovsky, Russia's Deputy Minister of Energy, assured the audience that Russia's strategic objective is "To achieve a Pan-European energy space, with a functioning integrated network infrastructure, with open, transparent, efficient and competitive markets, making the necessary contribution to ensuring energy security and reaching the sustainable development goals of Russia and the EU." He added that negotiations between the EU and Russia will ensure a solution to the problems raised by the Third Energy Package, which has been seen as a roadblock to the commencement of construction.

Despite some concerns raised by the EU, independent research undertaken by World Thinks, a research agency based in the UK and presented at the conference, showed that 59% of the general public support South Stream in the participant countries, and about 58% believe the advantages outweigh the disadvantages -demonstrating a rather positive outlook towards the overall project. The research further revealed that key stakeholders, including academics, politicians, policy makers and business leaders, feel that South Stream will diversify supplies, and increase security. The survey also revealed that there is clearly strong support for South Stream and also for natural gas as people see it as preferable to coal, oil and nuclear.

A number of independent experts addressing the conference noted that much more needed to be done to open up dialogue between Russian and the EU. Director of the LLM Programme at City Law School, Professor Alan Riley stressed that there were several possible resolutions for Russia and Europe, and that the current energy policies of both countries were not working.

Professor Riley said, "European policy is not making the right steps towards energy diversification and security. Countries such as Germany are burning more and more coal, rather than attempting to reduce its use and make way for natural gas and possibly renewables down the line." He also said that Russia needed to actively participate in the energy debate in Brussels in order to find a suitable solution for both sides.

Highlighting the benefits of South Stream for her own country, Zorana Mihajlovic, Serbia´s Minister of Energy, Development and Environmental protection, told the conference, "South Stream is of great economic and geo-strategic importance for Serbia. The project demonstrates that Serbia still has an important role to play today as a key bridge between Europe and Russia."

She also said that natural gas has an important role to play in the energy mix both of Serbia but the EU too, adding that at a time of austerity in Europe, the economic investment required to develop South Stream offers "significant benefits" to a part of the continent that seeks economic stimulus.

The conference in Brussels was the last in a series to have been held in participatory countries over the course of 2013, as part of an effort to bring greater transparency to the pipeline and provide a forum for a range of experts and industry figures to add their voices to the debate. Other speakers present at yesterday's conference also included all directors of South Stream joint ventures in each country, including Oleg Aksyutin, CEO of South Stream Transport and Gazprom Member of the Management Committee, Alexander Syryomatin, Deputy Head, Gazprom Project Management, Franc Cimmerman, from Plinovodi, and Zorana Mihajlovic, Serbian Minister of Energy and Development amongst others.

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