Russia signs S Stream gas pipeline deal with Serbia and Hungary
Mon, 31 March 2008
RUSSIA and Serbia have signed an agreement to create a joint company that will build the 400-km long Serbian stretch of the South Stream gas pipeline. The new company will plan the project during the next 18 months, including the rights and obligations of the Russian-Serbian enterprise, according to the agreement signed by Gazprom’s CEO Alexei Miller and his Srbijagas counterpart Sasa Ilic.
"We have allocated three months for the creation of the company, and another 18 months for the feasibility study," Gazprom's spokesman Sergei Kupriyanov told reporters in Belgrade. "We expect construction to start no later than 24 months after the feasibility study has been completed," he added.
The $14.65-billion project being planned by Gazprom and Italy's ENI is designed to carry 10bn cum/yr of gas to Western Europe. Transit fees could bring an annual $200 million to Serbia. Under the deal, Serbia has joined the South Stream project, and has allowed Gazprom to buy a controlling stake in the Serbian oil monopoly NIS, widely seen as a politically-motivated agreement in appreciation of Russia's support for Serbia on the issue of Kosovo.
On 28 February, Russia also signed an agreement with Hungary on the new natural gas pipeline to supply Europe. This follows an agreement signed with Bulgaria earlier this year, leaving Romania as one of the only southern European countries still loyal to the Nabucco pipeline project, which has been a US and EU top priority.
The South Stream project will consist of two branches diverging from Bulgaria: one to run south through Greece and Italy, while the other will run northwards, passing through Serbia and Hungary.