South Stream Project Gains Two Steps Ahead

The South Stream pipeline project has gained considerable pace with regards to its completion as notable developments in the two main countries from where it is scheduled to pass through.

In Bulgaria, which is the anchor point for the pipeline's route towards the EU markets, the Senior Environmental Experts Council (SEEC) of the government, announced that the project fully complies with all environmental standards of the country and of the EU and thus can proceed.

The SEEC is convened by the ministry of environment for all major infrastructure projects and decided unanimously after a four hour session that was composed by representatives of local municipalities, NGO's, representatives of the Danube Basin and Black Sea communities, as well independent scientists and state officials from several ministries.

Additionally, Gazprom has in the recent past announced that it will finance directly and fully the cost of construction through Bulgaria of approximately €3.1 billion. No financial guarantees are needed from the Bulgarian side. Thus construction of the Bulgarian route has been set and can commence as early as spring 2014 as local Bulgarian media report presently.

Another notable development was the announcement in Serbia by government authorities that in the coming weeks a final draft of the spatial plan for the pipeline route will be ratified, paving the way for its construction, which could begin as early as December 2013.

The total length of South Stream in Serbia will be 422.4 km and it will pass through 33 municipalities and communities from the borders with Bulgaria and Northwards to the borders with Hungary. It will enter Serbian territory through the town of Zajecar and exit through the town of Sombor. Also a 107 km spur will traverse Westwards to Bosnia-Herzegovina and another 50 km spur will join Croatia with the main South Stream route from Serbia. As in the case of Bulgaria, Gazprom will fully cover the €1.7 billion construction cost. 

The role of Romania begins to be highlighted as of late, regarding its inclusion in the South Stream project after Nabucco's failure. Recently, a diplomat from embassy of Kazakhstan in Bucharest mulled the prospect, whilst local press debates the issue and presents information around probable developments.

Meanwhile, Romanian President Traian Basescu requested compensation from the EU for the failure of the Nabucco project, citing that Romania chose that route instead of South Stream, which further empowers Gazprom's dominance in the European gas market. Nevertheless, Romania has since 2010 been in negotiations with Gazprom over South Stream, while also publicly supporting Nabucco, similar to Bulgaria. In reality on October 13, 2010 Gazprom and the Romanian Transgaz signed a Memorandum of Intent to prepare a feasibility study for South Stream in Romania.

Presently, Romania covers less than a third of its gas needs by local production and has high hopes for increasing that through new hydrocarbons discoveries and shale gas prospects. It is safe to assume that if those expectations are not met, Bucharest may eventually decide to enter South Stream, likely via Bulgaria.