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Russia considers South Stream pipeline via Croatia

23rd August 2012

Russia’s Gazprom is in talks with pipeline constructor Plinacro to route South Stream pipeline project through Croatia rather than Hungary

Russia considers South Stream pipeline via Croatia
Gazprom caters to 40 per cent of the EU's energy needs and exported around 150 billion cubic meters of gas to the region in 2011

The world’s largest holder of gas reserves, Russian Gazprom and Croatian pipeline operator Plinacro are in talks to route the planned South Stream pipeline through Croatia instead of Hungary, it emerged on Tuesday.

“The fact is that we are having intense talks but the final decision rests with Gazprom," a Plinacro spokesperson told Reuters. "We can't say when they will decide, but it could be within a week, a month, or by the end of this year,” she added.

Contacted by OGT, a spokesperson for Gazprom's Information Directorate said: "At present, Gazprom is considering suggestions of some countries who have expressed their desire to join the project as both a consumer and transit country."

"Based on the results of a pre-investment stage, Gazprom and Plinacro Ltd are discussing the conditions of the shareholders agreement of a joint project company with the purpose of its subsequent establishment."

The South Stream pipeline will carry Russian gas to southern Europe through the Black Sea. The project is worth an estimated USD 18.25bn.

The first gas is expected to be pumped through the pipeline in 2015, and export some 63 billion cubic meters to southern Europe.

Gazprom caters to 40 per cent of the EU’s energy needs and exported around 150 bn cubic meters of gas to the region in 2011.

Gazprom owns a 50 per cent stake in the project, with the remaining half distributed by Italy’s Eni (20 per cent), Germany’s Wintershall and France’s EDF (15 per cent share each).

Croatia and Russia in 2010 signed an agreement on the South Stream project. A feasibility study was inked in November 2011, and the last visit of a Gazprom representative to the country took place in April this year.

However, Hungary’s delays in transferring a 50 per cent stake in the South Stream Hungary project from state-run bank MFB to state-run energy supplier MVM have reportedly frustrated the process and aroused impatience among the project’s stakeholders.

A final investment decision on South Stream, a rival to the EU-backed pipeline project Nabucco, is expected in November, with construction to start in December.

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