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South Stream gas pipeline begins construction

10th December 2012

Inauguration of construction works on South Stream gas pipeline attended by high profile figures Vladimir Putin, Gazprom’s Alexey Miller, CEO of Eni and others

South Stream gas pipeline begins construction
The 900 km long and over 2 km deep South Stream will carry Russian gas to southern Europe through the Black Sea

The construction start-up of the much anticipated USD 18.25bn South Stream gas pipeline began on Monday, with celebrations attended by high profile leaders and representatives from the oil and gas industry at the Russkaya compressor station site near Anapa, Krasnodar territory.

The celebrations were attended by Russian president Vladimir Putin, representatives of the participating countries, Alexey Miller, chairman of the Gazprom Management Committee, Paolo Scaroni, CEO of Eni, Henri Proglio, CEO of EDF, and others.

“The start-up of South Stream construction is indeed a historical event. The project embodies the intention of Russia and the countries of Southern and Central Europe to strengthen the partnership in the energy sector and to create a new reliable system of Russian gas supplies to European consumers. South Stream is a comprehensive infrastructure project that gives a powerful impetus to development of the economies in the participating countries,” said Alexey Miller.

A spokesperson for Gazprom Group’s Information Directorate told OGT: “Europe will need an ever more pervasive network of gas transmission facilities to satisfy the growing energy demand. South Stream will contribute considerably to satisfying this need. It will provide a direct link between hydrocarbon suppliers and consumers, ensure delivery of extra gas volumes and make an invaluable contribution to enhancing European energy security.”

The 900 km long and over 2 km deep South Stream will carry Russian gas to southern Europe through the Black Sea.

Gazprom and Eni own a 50 per cent and 20 per cent stake in the USD 18.25bn project, respectively, while Germany’s Wintershall and France’s EDF each own 15 per cent. Russia is expected to provide around half of the funds required to put the project on wheels.

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 European Union’s energy needs and exported an estimated 150 billion cubic meters of gas to the region in 2011. Europe’s dependence on gas is expected to increase in the next thirty years. The UK is estimated to import 50-80 per cent of its gas needs by 2020 according to The Oxford Institute for Energy Studies.

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