Strategic Balkan - Challenges of Balkan's Powder Keg

The South Stream and Energy Security in South East Europe Part I

December 15, 2013

Energy and persistence conquer all things. Benjamin Franklin South Stream is a gas pipeline to transport Russian natural gas through the Black Sea to Bulgaria and further to Greece, Italy and Austria. The project is seen as rival to the planned Nabucco pipeline. Construction started in December 2012, with a first commercial deliveries in late 2015. The South Stream project is aimed at strengthening the European energy security. It is the key project in the diversification strategy for gas supply routes to the EU. The South Stream gas pipeline will ensure a direct connection between hydrocarbons suppliers and consumers thus raising significantly the energy supply security on the entire European continent. The South Stream pipeline project was announced on 23 June 2007, when the Chief Executive Officer of Italian energy company Eni Paolo Scaroni and the Vice-Chairman of Russian Gazprom Alexander Medvedev signed in Rome a Memorandum of Understanding (MOU) for construction of South Stream. On 22 November 2007, Gazprom and Eni signed in Moscow an agreement about establishing a joint project company for the commissioning of the marketing and technical feasibility studies of the project. The preliminary agreement between Russia and Bulgaria on Bulgaria's participation in the project was signed on 18 January 2008 and ratified by Bulgarian Parliament on 25 July 2008. It was agreed to set up an equally owned company to build and operate the Bulgarian section of the pipeline. The first agreement between Russia and Serbia was signed even before announcement of the South Stream project. On 20 December 2006, Gazprom and Serbian state-owned gas company Srbijagas agreed to conduct a study on building a gas pipeline running from Bulgaria to Serbia. On 25 January 2008, Russia and Serbia signed an agreement to route a northern pipe of South Stream through Serbia and to create a joint company to build the Serbian section of the pipeline and large gas storage facility near Banatski Dvor in Serbia. On the same day, Russia and Hungary agreed to set up an equally owned joint company to build and operate the Hungarian section of the pipeline. On 29 April 2008, Russia and Greece signed an intergovernmental agreement on cooperation in construction and operation of the Greek section of South Stream. Serbian and Russian presidents, Boris Tadić and Dmitry Medvedev, sealed the deal regarding the South Stream construction in December 2008. On 15 May 2009, in Sochi, in presence of the Prime Minister of Russia Vladimir Putin and the Prime Minister of Italy Silvio Berlusconi, the gas companies of Russia, Italy, Bulgaria, Serbia and Greece signed an agreement on construction of the South Stream pipeline. On 6 August 2009, the Prime Minister of Russia Vladimir Putin and the Prime Minister of Turkey Recep Tayyip Erdoğan in attendance of the Prime Minister of Italy Silvio Berlusconi signed a protocol routing the pipeline through the Turkish territorial waters. On 14 November 2009, followed the talks between Slovenian Prime Minister Borut Pahor and Russian Prime Minister Vladimir Putin, the agreement on the terms of which a part of the pipeline will run through Slovenia to Northern Italy was signed by Russian Energy Minister Sergei Shmatko and Slovenian Economy Minister Matej Lahovnik in Moscow. As per earlier 2008 agreement between two countries, on 17 November 2009, Russian Gazprom and Serbian Srbijagas created South Stream Serbia AG in Bern, Switzerland. The joint engineering company prepare feasibility study of the Serbian section of project. On 2 March 2010, Russian Energy Minister Sergei Shmatko and Croatian Economy, Labor and Entrepreneurship Minister Djuro Popijac in the presence of the Prime Minister of Russia Vladimir Putin and Prime Minister of Croatia Jadranka Kosor signed an agreement on construction of a South Stream section through Croatia. On 19 June 2010, Gazprom, Eni, and Électricité de France published a joint press release confirming that EDF will join the project. On 21 March 2011, Slovenia and Russia signed an agreement regarding the establishment of a joint venture South Stream Slovenia. On 25.07.2013 The Vice Premier and Finance Minister of Republic of Macedonia, Mr. Zoran Stavreski signed the agreement on construction of a South Stream section through Republic of Macedonia. Experts share the opinion that in the medium and long term gas demand will grow in the European Union. The countries which used to consume moderate amounts of gas for industrial purposes are likely to guide their economies towards its increased utilization, since coal, fuel oil and nuclear power are less environmentally-friendly if compared to natural gas. Regardless that indigenous production still satisfies the bulk of consumption in Europe today, it will steadily decrease in time. Europe will need more imported gas and, accordingly, new transmission capacities. According to the consensus forecast by the world’s leading forecast centers, Europe’s annual demand for additional gas import may reach 80 billion cubic meters by 2020 and surpass 140 billion cubic meters by 2030.

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