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    South Stream Pipeline: “Based on Parity”

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Summary

Russian gas deliveries to Europe have been stable for more than 40 years, according to Sebastian Sass, Head of Communications & Spokesperson, South Stream Transport AG, who says South Stream is often perceived as a purely Russian enterprise, but is, in fact, based on parity.

by: Drew Leifheit

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Natural Gas & LNG News, Bulgaria, Russia, , South Stream Pipeline, Top Stories

South Stream Pipeline: “Based on Parity”

The South Stream natural gas pipeline project through the Black Sea is a Russian-EU partnership.

“Often our project is perceived as a purely Russian enterprise. In fact, it’s based on parity,” Sebastian Sass, Head of Communications & Spokesperson, South Stream Transport AG said.

South Stream Transport AG is in charge of planning and constructing the offshore section of South Stream, from Russia to Bulgaria. “That’s the competence and task of our company. The offshore crossing through the Black Sea is the key link, connecting the world’s largest gas sources in Russia with the consumers in the EU. We believe it’s in both sides’ interest that this is based on parity.”

The task of constructing the offshore section of the South Stream natural gas pipeline is a complex and ambitious endeavor.

“Comprising a 900 km underwater pipeline from Russia to Bulgaria through the Black Sea it will reach a maximum depth of 2,500 meters. When fully operational, the pipeline will have a capacity of 63 billion cubic meters per year, comprising four lines,” he said.

South Stream Transport AG, the company responsible for the planning, construction, and subsequent operation of the offshore gas pipeline through the Black Sea, was established in October of last year in Zug, Switzerland.

South Stream Transport AG’s Board of Directors, which had recently been appointed, has six members: “Three of which are from our Russian shareholder; three of which come from our EU-based shareholders and the interesting thing is that this really does reflect the fact that South Stream Transport is a project based on genuine parity between the Russian partner and the EU partners. The shareholding is divided accordingly and this is reflected in the composition of our board.”

He reported that 50% of South Stream Transport AG was owned by the Russian company OAO Gazprom; the Italian company Eni S.p.A. acquired a 20% stake; the French energy company EDF and the German company Wintershall Holding GmbH (BASF Group) had acquired 15% each.

“Russian gas deliveries to Europe have been stable for more than 40 years. Even during the Cold War, gas supplies from Russia have been uninterrupted. This proves that Russia is a stable and reliable gas supplier,” said Mr. Sass.

“The relative share of Russian gas in EU imports now stands at half of its 1980 level, despite the fact that total imports from Russia have grown,” he explained. “This shows that sources have been successfully diversified, with new suppliers entering the market such as Norway and Algeria. Today’s deliveries of Russian gas use in majority the same routes as in the 1980s. While the first line of the Nord Stream Pipeline started delivering gas into the European grid in November 2011, there is a clear need for yet more diversification.”

He added that the South Stream offshore crossing through the Black Sea did provide for diversification of routes and provided additional capacity.

“Growth demands have been revised,” he said. “While European gas consumption is rising, the region’s domestic production is declining. The revision of energy policies in some EU countries will somehow need to be compensated and renewables are not in a position to cover that fully.”

Mr. Sass reported that the Consolidated Feasibility Study for the South Stream offshore section had been completed.“We have the ambitious target to come to an FID (Final Investment Decision) and to start the construction of the South Stream Offshore Pipeline by the end of this year,” he said.

“We aim to be delivering gas by the end of 2015 through the first of four offshore pipelines. There will be altogether four, which will be taken into operation subsequently and our main aim is to deliver gas within that timeline.

“The milestones that we need to achieve ahead of that are all aiming at making this particular objective of delivering gas within that timeframe possible,” he continued.

Meanwhile, South Stream Transport AG has also recently launched its website.

“The website will be a tool to implement transparent communications. Currently, we’ve launched it in English and Russian but it will be expanded into a number of languages, and also as the project progresses there will be more detailed information on the project as such, on the Environmental and Social Impact Assessments for example,” he said.

Mr. Sass emphasized the importance of providing information about such energy projects as South Stream.

“With the launch of our website, we are initiating a proactive and timely information exchange with all interested stakeholder groups. We are committed to transparency and openness. Our website will be an essential element to fulfill our commitment,” he explained.