Putin Orders South Stream Construction to Start in 2012

Russian Prime Minister Vladimir Putin has instructed the CEO of Gazprom, Alexey Miller, to begin construction on the South Stream pipeline before the end of 2012.

"I think it would be desirable to start (construction) at the end of next year," the prime minister told Mr. Miller following a meeting at Mr. Putin's state residence in Novo-Ogaryovo, Russia.

Alexey Miller told Prime Minister Putin that the total cost of the South Stream pipeline would be €16.5 billion, with Gazprom paying €7.5 billion. The cost of construction across the Black Sea would cost €10 billion, he said, with the remaining €6.5 billion allocated to construction of the pipeline on-land.

Mr. Miller confirmed after the meeting that Prime Minister Putin had asked for the project to brought forward to before the end of 2012, instead of its original launch date of 2013.

The South Stream project continues to gain momentum despite objections from Ukraine about the pipeline. Ukraine has repeatedly said that the pipeline, which will bypass the country entirely, is not cost effective or the best route for the gas.

At the meeting, Prime Minister Putin encouraged Mr. Miller to continue to negotiate with Ukraine, saying the country's gas transport system would again be in demand.

"I'd like you to continue these talks on the basis that Ukraine was, is and will remain our strategic partner in this area of our joint work, bearing in mind the growing demand from European consumers," he said.