By Gabriele Steinhauser
BRUSSELS--The European Union said Tuesday it will continue to
work with its member states on finding a deal with Russia to build
a gas pipeline though southeastern Europe, despite an announcement
by Russia's president, Vladimir Putin, that the project has been
abandoned.
"The next meeting [on the South Stream pipeline] had been
planned for the 9 December 2014 and it will take place regardless
of the announcement by Russia to stop the project," the EU's vice
president for energy, Maros Sefcovic, said. "Obviously this new
development will be an additional element that will be discussed in
that meeting."
The $20-billion South Stream project ran into trouble earlier
this year when the European Commission, the EU's executive arm,
said that national agreements on the pipeline with Moscow were
illegal under EU law. The pipeline, designed to transport Russian
gas underneath the Black Sea to Bulgaria and other countries in
southeastern Europe, would have allowed Russian gas to bypass
Ukraine, whose disputes with Moscow have stopped supplies to the EU
in the past.
But Mr. Putin said on Monday that failure to reach a deal on
South Stream with Bulgaria had prompted Russia to drop the project
and instead build a pipeline through Turkey. "We couldn't get
necessary permissions from Bulgaria, so we cannot continue with the
project. We can't make all the investment just to be stopped at the
Bulgarian border," Mr. Putin said in Ankara where he is on a state
visit. "Of course, this is the choice of our friends in
Europe."
At least one of Russia's European partners in the South Strean
project appeared taken aback by Mr. Putin's announcement. Saipem
SpA, which has a EUR2 billion ($2.5 billion) contract to install
the first subsea line for South Stream, said Tuesday it hadn't been
contacted about Russia's plans to terminate the project and is
continuing to carry out its work. A Saipem ship in charge of with
laying the gas pipes left Bulgaria yesterday to reach the Russian
Black Sea coast.
Christian Egenhofer, a senior fellow at Brussels-based think
tank Centre for European Policy Studies, said Monday's announcement
might be an attempt to exert pressure on Bulgaria to offer
favorable terms to Russia's OAO Gazprom, which was spearheading the
South Stream project. "You could interpret this as a threat against
Bulgaria," he said.
The EU has been reticent about South Stream from the start and
would have preferred a pipeline to southeastern Europe that would
be able to ship gas from countries other than Russia. At the same
time, it remains dependent on Russian gas and is keep to find
alternative routes bypassing Ukraine.
The main standoff between Brussels and Moscow over South Stream
has been on how much control Gazprom can have over the project. EU
law places restrictions on companies being in charge of supply and
at the same time owning the pipelines transporting the gas--a
provision that Gazprom and Russia have fought to avoid for the
South Stream project.
Eric Sylvers
contributed to this article.
Write to Gabriele Steinhauser at
gabriele.steinhauser@wsj.com
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