EC: Flaws of South Stream Agreements with Gazprom Revealed in August

Marlene Holzner has suggested that the information about the irregularities in the South Stream intergovernmental agreements with Gazprom had been available in August.

At a regular briefing of the EC on Friday, the spokeswoman for EU Energy Commissioner Guenther Oettinger suggested that the EU Member States which signed had agreements with Russia on the South Stream gas pipeline had known back in August that the deals were marred by shortcomings and had to be renegotiated.

Holzner, as cited by dnevnik.bg, announced that the EC had received the bilateral agreements of the EU countries with Russia in February 2013, it had taken some time to analyze them, issuing conclusions in August that they contradicted EU law.

She noted that the affected countries had been informed in writing about that.

Holzner rejected claims of Gazprom that the intergovernmental agreements of countries participating in the South Stream project with Russia had been public for years.

She reminded that only a part of these countries had published the provisions of the agreements in their official newspapers.

Holzner declared that the problem was not so much in the construction of the gas pipeline but in its functioning, stressing that the conduit had to provide access to the pipe to more than one supplier, which was not included in the current version of the IGAs.

Asked whether it was possible to apply an exemption from the EU's Third Energy Package, as was the case with the Nord Stream project, as Gazprom had suggested, she reminded that a temporary exemption had been requested and granted in that case.

"If Gazprom requests an exemption for South Stream, we will decide whether we can grant it, but we have not received such a request," she said.

Holzner said that the only option for the EC at present was to seek a revision of the bilateral agreements, and in the case of a refusal of Gazprom, the EU countries would have to withdraw.

Earlier on Friday, Gazprom issued a media statement, expressing disappointment and surprise at the recommendation of the European Commission for the revision of bilateral agreements on the South Stream gas pipeline project.

"It is customary for trans-border investment projects to be supported by intergovernmental agreements in order to achieve security and stability for investors," according to a statement of Gazprom's press office, as cited by the Bulgarian Telegraph Agency (BTA).

The Russian gas insisted that it was not a party to these agreements and that the EC had picked an inappropriate moment, taking into account that, several countries had declared the South Stream gas pipeline project a national priority.

The press release was issued in response to a recent recommendation of the EC that the intergovernmental agreements between Russia and EU Member States on the project be renegotiated in order to make them compliant with EU law.

The EC threatened infringement proceedings against EU countries on the route of the pipe unless they took steps to make the agreements legally compliant.

"The construction of the gas pipeline will proceed according to schedule and in full compliance with local legislation and international standards," Gazprom assured Friday, adding that the regulatory issues related to EU law could be clarified alongside that process.

The Russian energy giant noted that it had reached agreement on the exemption from the EU's Third Energy Package legislation for the Nord Stream project and South Stream could also be granted an exemption.

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