European authorities to renegotiate South Stream contracts

26/12/2013

EU member states' South Stream contracts with Moscow violate Union rules, officials say.

By Igor Jovanovic for Southeast European Times in Belgrade -- 26/12/13

photo

Construction of the pipeline has begun in Bulgaria. [Gazprom]

EU Energy Commissioner Gunther Oettinger will travel to Moscow next month to renegotiate agreements on the South Stream pipeline for six EU member states and candidate country Serbia.

Earlier this month, the European Commission said the current agreements violate EU law, which says that a country cannot function as a pipeline operator and be a gas supplier monopoly at the same time.

The South Stream pipeline is a project launched by Russian state-owned company Gazprom, which holds a gas supplier monopoly in that country. It would bring Russian gas to western European markets via the Black Sea bed, Bulgaria and Romania.

"We believe that South Stream is a very important supplement to the Europe-wide pipeline network and we are not against it, but European legislation must be respected when it comes to the protection of the environment and of the consumers," Oettinger said after meeting with representatives from Greece, Bulgaria, Hungary, Austria, Slovenia and Croatia earlier this month.

The project is worth more than 16 billion euros and means greater energy independence for the countries it traverses.

Construction of the pipeline is under way in Bulgaria and Serbia.

The situation is complicated for Serbia because Belgrade did not negotiate the pipeline as an individual agreement with the Russians, rather it is part of a much broader energy agreement, through which Russia purchased Serbian oil company NIS and pledged to build another gas storage facility in Serbia.

Serbia Prime Minister Ivica Dacic said disputes over the pipeline should be resolved by the EU and Russia.

"Serbia cannot influence that," Dacic told reporters. "We are in the middle of South Stream, nothing is up to us. As far as Serbia is concerned, everything was done in tune with our laws."

However, Predrag Simic, a professor at the Belgrade Faculty of Political Sciences, told SETimes that Serbia might have no choice but to get involved.

"As an EU candidate country, Serbia is expected to completely follow Union policy," Simic said, adding that Belgrade expects significant profit and energy security from the implementation of the South Stream project.

Bulgaria is firmly committed to complying with EU legislation, according to Denitsa Georgieva, a spokesperson for the country's economy and energy ministry.

"The fact that South Stream passes through the territories of EU member states suggests that the European Commission should have an important and active role in the discussions with the Russian side," the ministry said in a statement.

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In Croatia, officials said they have not yet signed an agreement with Moscow, as the part of the pipeline that will run through the country is merely a branch, and not part of the main route.

"In the text itself and all statements we say that when all other EU members make an agreement with Russia on South Stream, then Croatia will sign a binding contract under the same terms. Until then, we don't have that," Economy Minister Ivan Vrdoljak told SETimes.

Correspondents Tzvetina Borisova in Sofia and Kruno Kartus in Osijek contributed to this report.

What role should the European Commission play in renegotiating the South Stream contracts? Tell us what you think below.

This content was commissioned for SETimes.com.
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