Russia, EU agree to resolve disagreements over South Stream

January 24, 2014

The second meeting of the inter-governmental working group on the South Stream gas pipeline will be held in February, the European Commission press service said on Thursday, January 23, after the end of the first meeting between Russian Deputy Energy Minister Anatoly Yanovsky and Dominique Ristori, Head of the European Commission’s General Directorate for Energy, Itar-Tass reported.

The sides reaffirmed their commitment to resolving all disagreements between Russia and the EU over South Stream through negotiations, the spokesperson said but did not specify how much time this might take.

The inter-governmental commission will rework the agreements between Russia and six EU countries through which the pipeline will run - Bulgaria, Romania, Hungary, Croatia, Slovenia, and Austria - as well Serbia, which is not an EU member. The European Commission insists that these agreements are at odds with the Third Energy Package.

However Russia says that South Stream, as a transboundary project, does not fall under the jurisdiction of the Third Energy Package. Moreover, all these agreements were signed in and after 2008 before the Third Energy Package entered into force.

A spokesperson for the European Energy Commissioner, Marlene Holzner, said in December 2013 that the start of the work to build the South Stream gas pipeline in Bulgaria and Serbia did not run counter to European anti-trust legislation all by itself, but the agreements between Russia and EU countries on its construction were not consistent with European legislation and needed correction.

She said the European Commission would not interfere in the construction of the gas pipeline but its operation would have to comply with European requirements.

Holzner also noted that the construction of the pipeline might be complicated by growing concerns among investors and a possible refusal by banks to provide loans for the project due to the risk of legal problems in the future.

She said, however, that the European Commission was ready to provide assistance to Russia and EU southern countries in correcting and finalising the South Stream agreements.

The spokesperson named three key faults in the agreements connected with the EU Third Energy Package. The main complaint concerns the EU ban on the operation of transport energy infrastructure for companies that produce energy resources. Under the agreements, the pipeline will be operated by Russia’s gas producer Gazprom.

The second problem is that the agreements do not specify the terms of access to the pipeline for companies from third countries. The third problem is the issue of transit tariffs.

Holzner confirmed that the European Commission had sent a message to Russia on December 2, in which it recommended revising these agreements.

Copyright: Itar-Tass, 2014