Gazprom CEO: South Stream Deal, Gas Prices for Bulgaria Unrelated

Energy | November 13, 2012, Tuesday // 15:15|  views

Gazprom CEO Alexei Miller attends an annual meeting of shareholders in Moscow, Russia, 29 June 2012. Photo by EPA/BGNES

The final investment decision on the construction of the underwater section of the South Stream gas pipeline is to be taken on November 14 and the construction is to start on December 7, according to Gazprom CEO Alexei Miller.

In an interview cited by ITAR-TASS, Miller explains that the contract with Bulgaria is to be signed on November 15, given that the agreements with Hungary, Serbia, and Slovenia have already been signed.

The CEO of Gazprom insists that the signing of the final investment decision on South Stream on the part of Bulgaria and the gas price reduction under the next contract between Gazprom and Bulgargaz are unrelated.

"As regards price revisions, all necessary changes have already been made to the contract for this year" he adds.

Although Miller cites a concrete date for the launch of construction works, it is still unclear which company will build it, points out.

According to the CEO of Gazprom, talks are underway with companies which have executed similar orders of Gazprom.

Miller says that a recent meeting with Eni CEO Paolo Scaroni featured a discussion on including Sapiem, part of Eni group, in the sea leg of the South Stream gas pipeline.

South Stream Transport AG, the project company in charge of the underwater section of the conduit, includes the following shareholders: Russian Gazprom (50%), Italian Eni (20%), German Wintershall and French EdF (15% each).

Meanwhile, a Tuesday media statement of Gazprom said that the Russian gas giant had signed a final deal with Slovenia to build the Slovenian stretch of the South Stream gas pipeline.

The construction of the 266km Slovenian section of the South Stream gas pipeline, which includes two compressor stations, is to cost over EUR 1B.

A total of 24 billion cubic meters of gas per year will be transported through Slovenia, of which 2 billion cubic meters will be kept to cover domestic needs and the rest will be carried to the Italian market.

Again on Tuesday, Gazprom and Slovenian Comita founded the South Stream Telecom AG joint venture which is to lay a fiber optic cable along the onshore part of South Stream.

According to preliminary calculations, the construction of the South Stream gas pipeline is to cost EUR 16 B.

The construction works are to be wrapped up in 2015 and the first commercial deliveries of gas are slated for the first quarter of 2016.

The Russia-backed gas pipeline is to reach full capacity in 2018.

The South Stream pipeline is to carry up to 63 billion cubic meters of natural gas to central and southern Europe, diversifying Russian gas routes away from transit countries such as Ukraine.

The pipes will go from Russia to Bulgaria via the Black Sea; in Bulgaria it will split in two – with the northern leg going through Serbia, Croatia, Hungary, and Slovenia to Austria and Northern Italy, and the southern leg going through Greece to Southern Italy.

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Tags: Alexei Miller, Gazprom, gas supplies, gas supply, Russian gas, South stream, South Stream gas pipeline, diversification


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