Putin to launch construction of South Stream pipeline

7th December 2012, Comments 0 comments

President Vladimir Putin on Friday launches construction of the South Stream pipeline that the Kremlin hopes will pump Russias gas to Europe while avoiding its unpredictable neighbour Ukraine.

Putin is scheduled to launch the pipeline at a ceremony outside the Black Sea city of Anapa with European partners of the Russian gas giant Gazprom in the project -- Italys ENI, France's EDF and Germany's Wintershall.

The launch at 1100 GMT is to be marked by a symbolic welding of the pipeline.

The pipeline will flow underneath the Black Sea and then through the Balkans to supply Gazproms big European clients with Russian gas and ensure the security of its energy exports.

Kremlin chief of staff Sergei Ivanov said last week that South Stream and a similar project in the Baltic, Nord Stream, would make Russian deliveries stable and completely independent of any outside factor, including transit.

But the project, which plans to start pumping gas from 2015, has also faced criticism for taking the ambitious option of building an entirely new pipeline rather than upgrading existing infrastructure in Ukraine.

The EU is also backing a rival project called Nabucco, a planned pipeline project to bring Caspian gas to Europe and regarded with the greatest of suspicion by Russia.

Russia and its EU clients are keen to avoid a repeat of the winter of 2009 when a bitter spat between Moscow and Kiev over gas prices caused European clients to be cut off from Russian gas for a fortnight.

The project is of huge personal importance for Putin and in a sign of his serious intent he ordered Gazprom chief executive Alexei Miller to bring the launch date forward to 2012 from 2013.

Miller has said that the total cost of the pipeline was estimated at 16.5 billion euros (more than $21.5 billion) -- 10 billion euros for building the pipeline across the Black Sea and 6.5 billion for its construction on land.

He said Russia would be paying around 7.5 billion euros of the pipeline's construction given that state-controlled Gazprom has a 50 percent share in the project.

Kiev's political relations with Moscow have fluctuated wildly in recent years while analysts say the Ukrainian gas transit network is in urgent need of modernisation.

The project was originally conceived jointly by Gazprom and the Italian energy firm ENI and they were later joined in the consortium by Germany's Wintershall and the French power producer EDF.

Russia also won crucial approval from Ankara to construct the South Stream pipeline through its waters.

After exiting the Black Sea, the pipeline is due to cross Bulgaria, Serbia, Hungary and Slovenia and then Austria to connect with the main European pipeline network.

The launching ceremony, called Welding the Partnership, will start at 1100 GMT and Putin will be joined by ENI CEO Paolo Scaroni, EDF chief Henri Proglio and Wintershall chief Rainer Seele.

South Stream is being built by a consortium owned 50 percent by Gazprom, 20 percent by ENI, 15 percent by EDF and 15 percent by Wintershall.

Russian gas deliveries currently represent a quarter of the European Union's total gas needs.

© 2012 AFP

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