South Stream granted go-ahead

July 2, 2014

The Ministry of Construction, Housing and Utilities of the Russian Federation has granted a construction permit to Amsterdam’s South Stream Transport for the South Stream gas pipeline.

The pipeline will originate in Russia, pass under the Black Sea, emerge in Bulgaria, then travel through Serbia, Hungary and Slovenia before terminating in Tarvisio, Italy. It will also supply gas to Croatia and Bosnia and Herzegovina.

South Stream Transport is a consortium consisting of OAO Gazprom, Eni SpA, EDF, and Wintershall Holding GmbH. The group is primarily responsible for the offshore pipeline component of the South Stream gas pipeline system through the Black Sea, Gazprom Deputy Chairman of the Board of Directors Alexey Miller said when opening the company’s offices in May 2013.

Under the permit, Gazprom said that South Stream Transit can begin establishing its construction site in Anapa, Russia; begin building necessary access roads; and planning for the protection of any surrounding rare plant and animal life. It can also begin receiving construction equipment.

The offshore pipeline will run 931km from Anapa to Varna, Bulgaria. According to South Stream Transit, four parallel gas pipelines, or “strings,” will run along the seabed in water depths reaching 2200m, with each string supplying 15.75Bcm/year of natural gas. The pipelines will be comprised of more than 75,000 individual pipes welded together on-board special pipe-laying vessels and then laid at depths of up to 2,200m.

Saipem, a subsidiary of Eni, received a US$552 million contract to construct the first and second pipelines, along with the shore crossings and associated facilities for all four pipelines. Saipem’s S-lay Castoro Sei and J-lay Saipem 7000 will complete the work. The first offshore string is planned to be built Q3 2015.

Although it aims to bring more gas to Europe- without crossing the Ukraine - the controversial project has already hit at least one snare. In June, European Union (EU) officials demanded suspension on the construction work. The EU wanted to investigate the manner in which contracts were awarded and ensure that they involved no dealings with sanctioned individuals.

The pipeline was an idea originally conceived of by Gazprom and Eni in 2006, with the memorandum of understanding inked in 2007. Construction contracts were sign 11 March 2014.

The Russian company OAO Gazprom holds a 50% stake in the joint venture. Its partners are Italy’s Eni (20%), France’s EDF and Germany’s Wintershall Holding GmbH (BASF Group) with 15% each.

Photo from Gazprom.



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