Putin advances South Stream construction to 2012

30th December 2011, Comments 0 comments

Prime Minister Vladimir Putin on Friday ordered construction of the South Stream pipeline, that aims to deliver Russian gas to Western Europe while avoiding Ukraine, to start at the end of 2012.

Putin's announcement marks an acceleration of the timetable for building the hugely ambitious pipeline and comes after Moscow won agreement from Ankara this week to lay the pipeline under Turkish waters.

"I think it would be desirable to start (construction) at the end of next year," Putin told the chief executive of Russian gas giant Gazprom Alexei Miller at a meeting at his Novo-Ogaryovo residence outside Moscow.

Miller told Putin that the total cost of the pipeline was estimated at 16.5 billion euros (over $21 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 pipleline's construction given that state-controlled Gazprom has a 50 percent share in the project.

Gazprom later confirmed that Miller had ordered the start date for the construction of the pipeline to be brought forward to 2012 from the original intended start date of 2013.

South Stream is a key strategic project for Russia, which will allow it to pump gas to the European Union via the Black Sea and the Balkans without using Ukraine's gas transit network.

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

Putin had announced this week after talks with Turkish Energy Minister Taner Yildiz that Turkey had issued final approval to construct the South Stream pipeline through its waters.

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

© 2011 AFP

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