Russia Considers Abandoning South Stream Gas Pipeline Project


Russia is studying possibilities to lower the cost of its South Stream gas pipeline project or replace it with a project stipulating liquefied natural gas supplies to Europe, the Kommersant business daily said on Thursday, quoting Russian Deputy Prime Minister Igor Sechin.

The South Stream is designed to transport Russian gas to Europe under the Black Sea bypassing Ukraine. The capacity of the 900 kilometer pipeline, which was planned to become operational in 2015, is intended to eventually reach 63 billion cubic meters per year.

“[Russian energy giant] Gazprom and the government are currently studying various options that would allow minimizing expenses while implementing the South Stream project,” Sechin told the newspaper after Wednesday’s talks between Russian President Dmitry Medvedev and Turkish Prime Minister Recep Tayyip Erdogan in Moscow.

“An option that stipulates the construction of an LNG plant at the Black Sea may become an addition or an alternative to the pipeline option,” he said, adding that the LNG plant may also be constructed in Northern Russia, close to Yamal Peninsula’s gas deposits.

Russia signed intergovernmental agreements with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria to build the pipeline’s overland section, but Turkey’s approval is still needed to construct its undersea section.

The Turkish authorities were expected to approve the construction by October 31, 2010. Sechin told journalists on Wednesday that Russia did not understand why Turkey was reluctant to give the green light for the project, adding that negotiations with Turkish partners would continue.

Ria Novosti

RIA Novosti was Russia's leading news agency in terms of multimedia technologies, website audience reach and quoting by the Russian media.

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