Russian Expert: South Stream Will Never Pay Off

Business » ENERGY | April 23, 2012, Monday // 16:19| Views: | Comments: 0
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Bulgaria: Russian Expert: South Stream Will Never Pay Off

The Russian-sponsored gas transit pipeline South Stream is a purely political project, and will never return the invested money, according to an independent Russian expert.

According to Mikhail Krutihin from the Russian consultancy RusEnergy, the construction of South Stream might end up costing up to USD 40 B.

"This will be madness. It would be cheaper to strike a deal with the Ukrainians, or even to pay more for the transit of natural gas in Europe," he said, as quoted by the Russian daily Nezavisimaya Gazeta.

The South Stream pipeline is intended to transport up to 63 billion cubic meters of Russian natural gas to Central and Southern Europe annually, diversifying Russian gas routes away from transit countries such as Ukraine.

The pipe will go from Russia to Bulgaria via the Black Sea; in Bulgaria it will split in two – with the northern leg going through Serbia, Croatia, Hungary, and Slovenia to Austria and Northern Italy, and the southern leg going through Greece to Southern Italy.

The construction of the South Stream gas pipeline will begin in December 2012, Russian Prime Minister Vladimir Putin announced on Thursday. Russia plans to start using the South Stream pipeline in 2015.

The pipeline's core shareholders include Gazprom with 50%, Italy's Eni with 20% and Germany's Wintershall Holding and France's EDF with 15% each.

"The construction of South Stream's offshore section will begin in December," Putin said during his meeting with at a meeting with Alexei Miller, head of Russia's Gazprom energy giant, while Miller announced that the pipeline would be launched in December 2015.

Gazprom has already established national joint ventures with companies from Austria, Bulgaria, Croatia, Slovenia, Greece, Hungary and Serbia to manage the onshore section of the South Stream pipeline.

Bulgaria recently committed itself to speeding up the construction of the Russian-sponsored pipeline on its territory, since on January 1, 2013, the EU is introducing new requirements for the access to energy networks.

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Tags: South stream, South stream, Russia, Italy, Austria, natural gas, gas transit pipeline, pipeline, ENI, Gazprom, Wintershall, EDF, Paolo Scaroni, Vladimir Putin, Alexei Miller, Mikhail Krutihin, RusEnergy
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