The Russian-sponsored gas transit pipeline South Stream is a threat to Ukraine's national security, according to Ukrainian Energy Minister Yury Boiko.

"The South Stream project is a real threat to our national interests, and we will always be against it," Boiko said in an interview with Ukraine's Inter TV channel as cited by RIA Novosti, regarding the project designed to circumvent Ukraine in Russian natural gas exports to Europe.

Russia annually transits about 100 billion cubic meters of gas to European countries via Ukraine, which makes up 80% of its total gas supplies to Europe. The EUR 16 B South Stream pipeline project is supposed to cut Russia's dependence on the Ukrainian transit system.

Even though President Viktor Yanukovich's administration is considered pro-Russian in the West, the Ukrainian authorities have repeatedly called on Russia to abandon the South Stream project and cooperate with Ukraine in modernizing its gas pipeline network.

The EU commissioner for energy, Gunter Ettinger, will visit Ukraine in June to witness the official start of the country's pipeline system renovation, Boiko said.

"The more we modernize our gas transportation system, the more we will be open and show our reliability, the less chances South Stream, which is designed to drain our gas transportation system, will have to be implemented," the Ukrainian Energy Minister added.

The modernization of Ukrainian gas pipelines is estimated to cost some USD 6.5 B.

Meanwhile, Russian energy giant Gazprom said it would announce the final South Stream pipeline route in summer. Gazprom is considering three routes for the project - through Bulgaria to Serbia, Hungary and Austria, through Bulgaria to Serbia, Hungary, Slovenia, Austria and Italy, and through Bulgaria and Greece to the south of Italy.

Russia accelerated its efforts to build South Stream after in January 2009 its gas war with Ukraine blocked most of its gas exports to Europe.

In November 2010, after months of exhausting talks, Bulgaria and Russia signed an intergovernmental agreement for the construction of the Bulgarian section of the South Stream gas transit pipeline in the presence of their Prime Ministers, Boyko Borisov and Vladimir Putin, in Sofia. The ownership of the Russian-Bulgarian joint company to build and manage the Bulgarian South Stream section will be split 50-50%.

The South Stream gas transit pipeline is supposed to be ready by 2015. It will be transporting 63 billion cubic meters of natural gas annually, or 35% of Russia's total annual natural gas export to Europe.

The South Stream pipe will start near Novorosiysk on the Russian Black Sea coast, and will go to Bulgaria's Varna; the underwater section will be 900 km long.

In Bulgaria, the pipe is supposed to split in two - one pipeline going to Greece and Southern Italy, and another one going to Austria and Northern Italy through Serbia, Croatia and Slovenia.

The project was initiated by Gazprom and the Italian company Eni, with French company EdF and German BASF to join as shareholders. It is seen as a competitor to the EU-sponsored project Nabucco seeking to bring non-Russian gas to Europe.

In a joint statement in late March 2011, Wintershall and Russian natural gas monopoly Gazprom OAO announced that oil and gas company Wintershall AG - a unit of German chemicals giant BASF SE - will take a 15% stake in the South Stream gas pipeline projec Gazprom will retain its 50% stake in the South Stream project, the statement added. At present the South Stream venture is owned 50:50 by Italy's ENI SpA and Gazprom. Electricite de France SA is to take a 10% stake in it later in 2011.

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